Selected data for each share of the Portfolio outstanding throughout each period were as follows:
Notes to financial statements
Delaware Pooled® Trust
April 30, 2009 (Unaudited)
Delaware Pooled® Trust (Trust) is organized as a Delaware statutory trust and offers 19 separate Portfolios. These financial statements and the related notes pertain to The Large-Cap Value Equity Portfolio, The Select 20 Portfolio, The Large-Cap Growth Equity Portfolio, The Mid-Cap Growth Equity Portfolio, The Small-Cap Growth Equity Portfolio, The Focus Smid-Cap Growth Equity Portfolio, The Smid-Cap Growth Equity Portfolio, The Real Estate Investment Trust Portfolio II, The Intermediate Fixed Income Portfolio, The Core Focus Fixed Income Portfolio, The High-Yield Bond Portfolio, The Core Plus Fixed Income Portfolio, The International Equity Portfolio, The Labor Select International Equity Portfolio, The Emerging Markets Portfolio, The Global Real Estate Securities Portfolio, The Global Fixed Income Portfolio, and The International Fixed Income Portfolio (each, a Portfolio, or collectively, Portfolios). The Real Estate Investment Trust Portfolio is included in a separate report. The Trust is an open-end investment company. Each Portfolio is considered diversified under the Investment Company Act of 1940, as amended, except for The Select 20, The Real Estate Investment Trust II, The Global Real Estate Securities, The Global Fixed Income and The International Fixed Income Portfolios, which are non-diversified. Each Portfolio offers one class of shares except for The Global Real Estate Securities Portfolio which offers Original Class and Class P shares. The Original Class shares do not carry a 12b-1 fee and the Class P shares carry a 12b-1 fee.
The investment objective of The Large-Cap Value Equity Portfolio is to seek long-term capital appreciation.
The investment objective of The Select 20 Portfolio is to seek long-term capital appreciation.
The investment objective of The Large-Cap Growth Equity Portfolio is to seek capital appreciation.
The investment objective of The Mid-Cap Growth Equity Portfolio is to seek maximum long-term capital growth. Current income is expected to be incidental.
The investment objective of The Small-Cap Growth Equity Portfolio is to seek long-term capital appreciation.
The investment objective of The Focus Smid-Cap Growth Equity Portfolio is to seek long-term capital appreciation.
The investment objective of The Smid-Cap Growth Equity Portfolio is to seek long-term capital appreciation.
The investment objective of The Real Estate Investment Trust Portfolio II is to seek maximum long-term total return, with capital appreciation as a secondary objective.
The investment objective of The Intermediate Fixed Income Portfolio is to seek maximum long-term total return, consistent with reasonable risk.
The investment objective of The Core Focus Fixed Income Portfolio is to seek maximum long-term total return, consistent with reasonable risk.
The investment objective of The High-Yield Bond Portfolio is to seek high total return.
The investment objective of The Core Plus Fixed Income Portfolio is to seek maximum long-term total return, consistent with reasonable risk.
The investment objective of The International Equity Portfolio is to seek maximum long-term total return.
The investment objective of The Labor Select International Equity Portfolio is to seek maximum long-term total return.
The investment objective of The Emerging Markets Portfolio is to seek long-term capital appreciation.
The investment objective of The Global Real Estate Securities Portfolio is to seek maximum long-term total return through a combination of current income and capital appreciation.
The investment objective of The Global Fixed Income Portfolio is to seek current income consistent with the preservation of principal.
The investment objective of The International Fixed Income Portfolio is to seek current income consistent with the preservation of principal.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by the Portfolios.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used. Securities listed on a foreign exchange are valued at the last quoted sales price on the valuation date. U.S. government and agency securities are valued at the mean between the bid and ask prices. Other debt securities, credit default swap (CDS) contracts and interest rate swap contracts are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Investment companies are valued at net asset value per share. Foreign currency exchange contracts and foreign cross currency exchange contracts are valued at the mean between the bid and ask prices. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Financial futures contracts and
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1. Significant Accounting Policies (continued)
options on futures contracts are valued at the daily quoted settlement prices. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices. Generally, index swap contracts and 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 Portfolios may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Portfolios value their securities at 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Portfolios may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal Income Taxes — No provision for federal income taxes has been made as each Portfolio 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 Portfolios evaluate tax positions taken or expected to be taken in the course of preparing the Portfolios’ 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 would be recorded as a tax benefit or expense in the current year. The adoption of FIN 48 did not result in the recording of any tax benefit or expense in the current period.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the classes of The Global Real Estate Securities Portfolio on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — Each Portfolio may invest in a pooled cash account along with other members of the Delaware Investments® Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. The aggregate daily balance of the pooled cash account is invested in repurchase agreements secured by obligations of the U.S. government. The respective collateral is held by each Portfolio’s custodian bank until the maturity of the respective repurchase agreements. Each repurchase agreement is at least 102% collateralized. However, in the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral may be subject to legal proceedings.
Foreign Currency Transactions — Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date. The value of all assets and liabilities denominated in foreign currencies is translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar daily. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Portfolios isolate that portion of realized gains and losses on investments in debt securities which is due to changes in foreign exchange rates from that which is due to changes in market prices of debt securities. For foreign equity securities, these changes are included in realized gains (losses) on investments. The Portfolios report certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, where such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of 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.
Reimbursement Fees — The Emerging Markets Portfolio may charge a 0.55% purchase reimbursement fee and a 0.55% redemption reimbursement fee. These fees are designed to reflect an approximation of the brokerage and other transaction costs associated with the investment of an investor’s purchase amount or the disposition of assets to meet redemptions, and to limit the extent to which the Portfolio (and, indirectly, the Portfolio’s existing shareholders) would have to bear such costs. These fees are accounted for as an addition to paid-in capital for the Portfolio in the statements of changes in net assets.
Other — Expenses directly attributable to the Portfolios are charged directly to the Portfolios. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on non-convertible bonds are amortized to interest income over the lives of the respective securities. Dividend income is recorded on the ex-dividend date. Realized gains (losses) on paydowns of mortgage- and asset-backed securities are classified as interest income. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distribution by the issuer. The financial statements reflect an estimate of the reclassification of the distribution character. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that a Portfolio is aware of such dividends, net of all non-rebatable tax withholdings. Withholding taxes on foreign dividends have been recorded in accordance with each Portfolio’s understanding of the applicable country’s tax rules and rates.
2009 Semiannual report Ÿ Delaware Pooled Trust
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Notes to financial statements
Delaware Pooled® Trust
1. Significant Accounting Policies (continued)
The Intermediate Fixed Income Portfolio declares dividends daily from net investment income and pays such dividends monthly. Each other Portfolio declares and pays dividends from net investment income, if any, annually. All Portfolios declare and pay distributions from net realized gain on investments, if any, annually.
Subject to seeking best execution, the Portfolios may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to each Portfolio in cash. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Portfolio on the transaction. Such commission rebates are included in realized gain on investments in the accompanying financial statements. The total commission rebates for the six months ended April 30, 2009 are as follows:
| | Commission Rebates |
| The Large-Cap Value Equity Portfolio | $ | 195 | |
| The Select 20 Portfolio | | 930 | |
| The Large-Cap Growth Equity Portfolio | | 14,560 | |
| The Focus Smid-Cap Growth Equity Portfolio | | 244 | |
The Portfolios may receive earnings credits from their custodian when positive cash balances are maintained, which are used to offset custody fees. The expense paid under this arrangement is included in custodian fees on the statements of operations with the corresponding expense offset shown as “expense paid indirectly. ”
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates
In accordance with the terms of the investment management agreements, Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager of the Portfolios, will receive an annual fee which is calculated daily based on the average daily net assets of each Portfolio.
DMC has voluntarily agreed to waive that portion, if any, of its management fees and reimburse each Portfolio to the extent necessary to ensure that annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and non-routine expenses or costs including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, non-routine expenses)) do not exceed specified percentages of average daily net assets of each Portfolio until such time as the waiver is discontinued. For purposes of these waivers and reimbursements, non-routine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Portfolios’ Board and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Portfolios.
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2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
The management fee rates, the operating expense limitation rates in effect for the six months ended April 30, 2009 and the operating expense limitation rates in effect prior to March 1, 2009 are as follows:
| | | | | | | Prior |
| | | | | | | to 3/1/09 |
| | | | | | | voluntary (unless |
| | | | | Voluntary | | otherwise noted) |
| | | | | operating expense | | operating expense |
| | | Management | | limitation as | | limitation as |
| | | fee as a percentage | | a percentage | | a percentage |
| | | of average daily | | of average daily | | of average daily |
| | | net assets (per annum) | | net assets (per annum)† | | net assets (per annum)†* |
| The Large-Cap Value Equity Portfolio | | | 0.55 | % | | | 0.70 | % | | | 0.68 | % |
| The Select 20 Portfolio | | | 0.75 | % | | | 0.89 | % | | | — | |
| The Large-Cap Growth Equity Portfolio | | | 0.55 | % | | | 0.65 | % | | | — | |
| The Mid-Cap Growth Equity Portfolio | | | 0.75 | % | | | 1.00 | % | | | 0.93 | % |
| The Small-Cap Growth Equity Portfolio | | | 0.75 | % | | | 0.95 | % | | | 0.89 | % |
| The Focus Smid-Cap Growth Equity Portfolio | | | 0.75 | % | | | 0.92 | % | | | — | |
| The Smid-Cap Growth Equity Portfolio | | | 0.75 | % | | | 0.95 | % | | | 0.92 | % |
| The Real Estate Investment Trust Portfolio II | | | 0.75 | % | | | 0.95 | % | | | 0.86 | % |
| The Intermediate Fixed Income Portfolio | | | 0.40 | % | | | 0.43 | % | | | — | |
| The Core Focus Fixed Income Portfolio | | | 0.40 | % | | | 0.43 | % | | | — | |
| The High-Yield Bond Portfolio | | | 0.45 | % | | | 0.59 | % | | | — | |
| The Core Plus Fixed Income Portfolio | | | 0.43 | % | | | 0.45 | % | | | — | |
| The International Equity Portfolio | | | 0.75 | % | | | — | | | | — | |
| The Labor Select International Equity Portfolio | | | 0.75 | % | | | — | | | | 0.96 | % |
| The Emerging Markets Portfolio | | | 1.00 | % | | | — | | | | 1.55 | % |
| The Global Real Estate Securities Portfolio | | | 0.99 | %** | | | 1.07 | % | | | 1.06 | %*** |
| The Global Fixed Income Portfolio | | | 0.50 | % | | | 0.60 | % | | | — | |
| The International Fixed Income Portfolio | | | 0.50 | % | | | 0.60 | % | | | — | |
| † | These operating expense limitations exclude certain expenses, such as 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and non-routine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations. |
| * | This information is provided for those Portfolios that had a change in the operating expense limitation during the period. |
| ** | 0.99% on the first $100 million; 0.90% on the next $150 million; 0.80% on assets in excess of $250 million. |
| *** | This was a contractual waiver. |
Mondrian Investment Partners Limited (Mondrian) furnishes investment sub-advisory services to The International Equity Portfolio, The Labor Select International Equity Portfolio, The Emerging Markets Portfolio, The Global Fixed Income Portfolio, and The International Fixed Income Portfolio. For these services, DMC, not the Portfolios, pays Mondrian the following percentages of the Portfolios’ average daily net assets.
| | | Sub-advisory fee as a |
| | | percentage of average daily |
| | | net assets (per annum) |
| The International Equity Portfolio | | | 0.36% | |
| The Labor Select International Equity Portfolio | | | 0.30% | |
| The Emerging Markets Portfolio | | | 0.75% | |
| The Global Fixed Income Portfolio | | | 0.30% | |
| The International Fixed Income Portfolio | | | 0.30% | |
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Portfolios. For these services, the Portfolios pay DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended April 30, 2009, the Portfolios were charged $61,115 for these services.
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Notes to financial statements
Delaware Pooled® Trust
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
The Bank of New York Mellon (BNY Mellon) provides custody, fund accounting and financial administration services to the Portfolios.
DSC also provides dividend disbursing and transfer agency services. The Portfolios pay DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, The Global Real Estate Securities Portfolio pays Delaware Distributors, L.P. (DDLP), the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.25% of the average daily net assets of the Class P shares. Original Class shares pay no distribution and service expenses.
At April 30, 2009, each Portfolio had receivables due from or liabilities payable to affiliates as follows:
| | | | | | Dividend | | | | | | | | |
| | | | | | disbursing, | | | | | | | | |
| | | | | | transfer | | | | | | | | |
| | | | | | agent and | | | | | | | | |
| | | | | | fund accounting | | | | | | Receivable |
| | | | | | oversight | | | | | | from DMC |
| | Investment management | | fees and | | Other expenses | | under |
| | fee payable to | | other expenses | | payable to DMC | | expense limitation |
| | | DMC | | payable to DSC | | and affiliates* | | agreement |
| The Large-Cap Value Equity Portfolio | | $ | 1,274 | | | $ | 496 | | | $ | 241 | | | $ | — | |
| The Select 20 Portfolio | | | 2,847 | | | | 505 | | | | 236 | | | | — | |
| The Large-Cap Growth Equity Portfolio | | | 89,189 | | | | 2,651 | | | | 4,806 | | | | — | |
| The Mid-Cap Growth Equity Portfolio | | | — | | | | 438 | | | | 188 | | | | 55 | |
| The Small-Cap Growth Equity Portfolio | | | — | | | | 500 | | | | 156 | | | | 2,360 | |
| The Focus Smid-Cap Growth Equity Portfolio | | | 625 | | | | 438 | | | | 113 | | | | — | |
| The Smid-Cap Growth Equity Portfolio | | | — | | | | 403 | | | | 122 | | | | 1,860 | |
| The Real Estate Investment Trust Portfolio II | | | 378 | | | | 447 | | | | 168 | | | | — | |
| The Intermediate Fixed Income Portfolio | | | — | | | | 478 | | | | 2,277 | | | | 1,185 | |
| The Core Focus Fixed Income Portfolio | | | — | | | | 583 | | | | 4,124 | | | | 2,437 | |
| The High-Yield Bond Portfolio | | | 3,018 | | | | 683 | | | | 3,051 | | | | — | |
| The Core Plus Fixed Income Portfolio | | | 9,285 | | | | 1,028 | | | | 5,863 | | | | — | |
| The International Equity Portfolio | | | 457,445 | | | | 8,514 | | | | 17,712 | | | | — | |
| The Labor Select International Equity Portfolio | | | 357,394 | | | | 6,490 | | | | 13,883 | | | | — | |
| The Emerging Markets Portfolio | | | 418,270 | | | | 5,693 | | | | 11,716 | | | | — | |
| The Global Real Estate Securities Portfolio** | | | 35,231 | | | | 1,446 | | | | 1,960 | | | | — | |
| The Global Fixed Income Portfolio | | | 46,050 | | | | 1,962 | | | | 4,063 | | | | — | |
| The International Fixed Income Portfolio | | | 2,198 | | | | 578 | | | | 1,036 | | | | — | |
| * | DMC, as part of its administrative services, pays operating expenses on behalf of the Portfolios and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees, and trustees’ fees. |
| ** | The Global Real Estate Securities Portfolio had distribution fees payable to DDLP of $1. |
2009 Semiannual report Ÿ Delaware Pooled Trust
110
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
As provided in the investment management agreement, the Portfolios bear the cost of certain legal and tax services, including internal legal and tax services provided to the Portfolios by DMC and/or its affiliates’ employees. For the six months ended April 30, 2009, the Portfolios were charged for internal legal and tax services by DMC and/or its affiliates’ employees as follows:
| The Large-Cap Value Equity Portfolio | | $ | 430 | |
| The Select 20 Portfolio | | | 424 | |
| The Large-Cap Growth Equity Portfolio | | | 11,136 | |
| The Mid-Cap Growth Equity Portfolio | | | 168 | |
| The Small-Cap Growth Equity Portfolio | | | 95 | |
| The Focus Smid-Cap Growth Equity Portfolio | | | 169 | |
| The Smid-Cap Growth Equity Portfolio | | | 43 | |
| The Real Estate Investment Trust Portfolio II | | | 206 | |
| The Intermediate Fixed Income Portfolio | | | 356 | |
| The Core Focus Fixed Income Portfolio | | | 1,268 | |
| The High-Yield Bond Portfolio | | | 961 | |
| The Core Plus Fixed Income Portfolio | | | 4,203 | |
| The International Equity Portfolio | | | 39,599 | |
| The Labor Select International Equity Portfolio | | | 30,115 | |
| The Emerging Markets Portfolio | | | 23,320 | |
| The Global Real Estate Securities Portfolio | | | 2,763 | |
| The Global Fixed Income Portfolio | | | 7,937 | |
| The International Fixed Income Portfolio | | | 975 | |
Trustees’ fees include expenses accrued by each Portfolio for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Portfolios.
3. Investments
For the six months ended April 30, 2009, each Portfolio made purchases and sales of investment securities other than short-term investments as follows:
| | Purchases | | | | Sales | | |
| | other than | | Purchases of | | other than | | Sales of |
| | | U.S. government | | U.S. government | | U.S. government | | U.S. government |
| | securities | | securities | | securities | | securities |
| The Large-Cap Value Equity Portfolio | | $ | 1,267,213 | | $ | — | | $ | 1,017,599 | | $ | — |
| The Select 20 Portfolio | | | 2,844,775 | | | — | | | 3,066,193 | | | — |
| The Large-Cap Growth Equity Portfolio | | | 47,956,207 | | | — | | | 81,297,646 | | | — |
| The Mid-Cap Growth Equity Portfolio | | | 1,682,114 | | | — | | | 1,403,181 | | | — |
| The Small-Cap Growth Equity Portfolio | | | 1,427,208 | | | — | | | 5,428,135 | | | — |
| The Focus Smid-Cap Growth Equity Portfolio | | | 562,606 | | | — | | | 2,088,432 | | | — |
| The Smid-Cap Growth Equity Portfolio | | | 668,352 | | | — | | | 2,096,250 | | | — |
| The Real Estate Investment Trust Portfolio II | | | 2,474,626 | | | — | | | 2,137,361 | | | — |
| The Intermediate Fixed Income Portfolio | | | 6,562,535 | | | 2,536,539 | | | 6,727,344 | | | 2,947,599 |
| The Core Focus Fixed Income Portfolio | | | 19,382,793 | | | 6,927,383 | | | 35,635,598 | | | 5,566,227 |
| The High-Yield Bond Portfolio | | | 8,227,418 | | | — | | | 10,260,543 | | | — |
| The Core Plus Fixed Income Portfolio | | | 71,125,638 | | | 7,944,295 | | | 128,369,298 | | | 9,100,850 |
| The International Equity Portfolio | | | 76,163,637 | | | — | | | 295,895,085 | | | — |
| The Labor Select International Equity Portfolio | | | 61,038,799 | | | — | | | 22,695,311 | | | — |
| The Emerging Markets Portfolio | | | 67,285,352 | | | — | | | 106,235,228 | | | — |
| The Global Real Estate Securities Portfolio | | | 32,308,055 | | | — | | | 50,445,597 | | | — |
| The Global Fixed Income Portfolio | | | 64,804,536 | | | 23,212,603 | | | 116,312,409 | | | 6,812,687 |
| The International Fixed Income Portfolio | | | 13,367,852 | | | — | | | 26,299,532 | | | — |
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(continues) 111
Notes to financial statements
Delaware Pooled® Trust
3. Investments (continued)
At April 30, 2009, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At April 30, 2009, the cost of investments and unrealized appreciation (depreciation) for federal income tax purposes for each Portfolio were as follows:
| | | | Aggregate | | Aggregate | | Net unrealized |
| | Cost of | | unrealized | | unrealized | | appreciation |
| | investments | | appreciation | | depreciation | | (depreciation) |
| The Large-Cap Value Equity Portfolio | | $ | 10,694,110 | | $ | 136,082 | | $ | (2,326,787 | ) | | $ | (2,190,705 | ) |
| The Select 20 Portfolio | | | 10,508,865 | | | 189,388 | | | (1,517,068 | ) | | | (1,327,680 | ) |
| The Large-Cap Growth Equity Portfolio | | | 288,659,031 | | | 5,346,554 | | | (61,142,503 | ) | | | (55,795,949 | ) |
| The Mid-Cap Growth Equity Portfolio | | | 3,632,806 | | | 312,927 | | | (292,101 | ) | | | 20,826 | |
| The Small-Cap Growth Equity Portfolio | | | 602,623 | | | 77,018 | | | (85,997 | ) | | | (8,979 | ) |
| The Focus Smid-Cap Growth Equity Portfolio | | | 3,526,897 | | | 206,579 | | | (826,172 | ) | | | (619,593 | ) |
| The Smid-Cap Growth Equity Portfolio | | | 2,878 | | | — | | | (2,878 | ) | | | (2,878 | ) |
| The Real Estate Investment Trust Portfolio II | | | 6,965,794 | | | 47,875 | | | (2,799,687 | ) | | | (2,751,812 | ) |
| The Intermediate Fixed Income Portfolio | | | 7,114,140 | | | 137,885 | | | (443,294 | ) | | | (305,409 | ) |
| The Core Focus Fixed Income Portfolio | | | 19,474,197 | | | 348,118 | | | (1,411,226 | ) | | | (1,063,108 | ) |
| The High-Yield Bond Portfolio | | | 21,037,413 | | | 794,660 | | | (1,938,715 | ) | | | (1,144,055 | ) |
| The Core Plus Fixed Income Portfolio | | | 69,138,051 | | | 1,523,592 | | | (6,033,577 | ) | | | (4,509,985 | ) |
| The International Equity Portfolio | | | 1,017,962,115 | | | 31,760,734 | | | (246,411,963 | ) | | | (214,651,229 | ) |
| The Labor Select International Equity Portfolio | | | 806,840,067 | | | 16,349,087 | | | (209,345,416 | ) | | | (192,996,329 | ) |
| The Emerging Markets Portfolio | | | 668,736,293 | | | 24,506,837 | | | (182,030,173 | ) | | | (157,523,336 | ) |
| The Global Real Estate Securities Portfolio | | | 87,699,232 | | | 978,346 | | | (27,907,900 | ) | | | (26,929,554 | ) |
| The Global Fixed Income Portfolio | | | 132,723,871 | | | 3,747,330 | | | (5,873,838 | ) | | | (2,126,508 | ) |
| The International Fixed Income Portfolio | | | 16,599,715 | | | 588,574 | | | (754,555 | ) | | | (165,981 | ) |
Effective November 1, 2008, the Portfolios adopted Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value as the price that each Portfolio 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. FAS 157 also establishes a framework for measuring fair value and a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. Each Portfolio’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-tier hierarchy of inputs is summarized below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
The following table summarizes the valuation of the Portfolios’ investments by the FAS 157 fair value hierarchy levels as of April 30, 2009:
| | The | | | | The | | The | | The |
| | Large-Cap | | The | | Large-Cap | | Mid-Cap | | Small-Cap |
| | Value Equity | | Select 20 | | Growth Equity | | Growth Equity | | Growth Equity |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Securities | | | | | | | | | | | | | | | | | | | | | | | |
| Level 1 | | | $ | 8,503,405 | | | $ | 9,181,183 | | | $ | 221,829,871 | | | | $ | 3,653,632 | | | | $ | 593,643 | |
| Level 2 | | | | — | | | | — | | | | 11,033,189 | | | | | — | | | | | — | |
| Level 3 | | | | — | | | | 2 | | | | 22 | | | | | — | | | | | 1 | |
| Total | | | $ | 8,503,405 | | | $ | 9,181,185 | | | $ | 232,863,082 | | | | $ | 3,653,632 | | | | $ | 593,644 | |
2009 Semiannual report Ÿ Delaware Pooled Trust
112
3. Investments (continued)
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
| | The | | | | The | | The | | The |
| | Large-Cap | | The | | Large-Cap | | Mid-Cap | | Small-Cap |
| | Value Equity | | Select 20 | | Growth Equity | | Growth Equity | | Growth Equity |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Balance as of 10/31/08 | | | $ | 23 | | | | $ | 918 | | | | $ | 12,121 | | | | $ | 211 | | | | $ | 347 | |
| Net change in unrealized appreciation/depreciation | | | | (23 | ) | | | | (916 | ) | | | | (12,099 | ) | | | | (211 | ) | | | | (346 | ) |
| Balance as of 4/30/09 | | | $ | — | | | | $ | 2 | | | | $ | 22 | | | | $ | — | | | | $ | 1 | |
| |
| Net change in unrealized appreciation/depreciation | | | | | | | | | | | | | | | | | | | | | | | | | |
| from investments still held as of 4/30/09 | | | $ | (23 | ) | | | $ | (916 | ) | | | $ | (12,099 | ) | | | $ | (211 | ) | | | $ | (346 | ) |
| | The | | The | | The | | The |
| | Focus Smid-Cap | | Smid-Cap | | Real Estate | | Intermediate |
| | Growth Equity | | Growth Equity | | Investment Trust | | Fixed Income |
| | Portfolio | | Portfolio | | Portfolio II | | Portfolio |
| Securities | | | | | | | | | | | | | | | | | | | |
| Level 1 | | | $ | 2,907,303 | | | | $ — | | | | $ | 4,213,981 | | | | $ | 679,863 | |
| Level 2 | | | | — | | | | — | | | | | — | | | | | 6,023,780 | |
| Level 3 | | | | 1 | | | | — | | | | | 1 | | | | | 105,088 | |
| Total | | | $ | 2,907,304 | | | | $ — | | | | $ | 4,213,982 | | | | $ | 6,808,731 | |
| |
| Derivatives | | | | | | | | | | | | | | | | | | | |
| Level 1 | | | $ | — | | | | $ — | | | | $ | — | | | | $ | — | |
| Level 2 | | | | — | | | | — | | | | | — | | | | | (3,120 | ) |
| Level 3 | | | | — | | | | — | | | | | — | | | | | — | |
| Total | | | $ | — | | | | $ — | | | | | — | | | | $ | (3,120 | ) |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
| | The | | The | | The | | The |
| | Focus Smid-Cap | | Smid-Cap | | Real Estate | | Intermediate |
| | Growth Equity | | Growth Equity | | Investment Trust | | Fixed Income |
| | Portfolio | | Portfolio | | Portfolio II | | Portfolio |
| Balance as of 10/31/08 | | | $ | 745 | | | | $ | 155 | | | | $ | 355 | | | | $ | 109,259 | |
| Net realized loss | | | | — | | | | | — | | | | | — | | | | | 87 | |
| Net change in unrealized appreciation/depreciation | | | | (744 | ) | | | | (155 | ) | | | | (354 | ) | | | | (21,779 | ) |
| Net purchases, sales, and settlements | | | | — | | | | | — | | | | | — | | | | | 17,521 | |
| Balance as of 4/30/09 | | | $ | 1 | | | | $ | — | | | | $ | 1 | | | | $ | 105,088 | |
| |
| Net change in unrealized appreciation/depreciation | | | | | | | | | | | | | | | | | | | | |
| from investments still held as of 4/30/09 | | | $ | (744 | ) | | | $ | (155 | ) | | | $ | (354 | ) | | | $ | (21,779 | ) |
2009 Semiannual report Ÿ Delaware Pooled Trust
(continues) 113
Notes to financial statements
Delaware Pooled® Trust
3. Investments (continued)
| | The | | The | | The | | The |
| | Core Focus | | High-Yield | | Core Plus | | International |
| | Fixed Income | | Bond | | Fixed Income | | Equity |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Securities | | | | | | | | | | | | | | | | |
| Level 1 | | | $ | 2,631,651 | | | $ | 94,270 | | | $ | 9,325,389 | | | $ | 767,635,971 |
| Level 2 | | | | 15,396,322 | | | | 19,790,739 | | | | 54,136,370 | | | | 35,674,764 |
| Level 3 | | | | 383,116 | | | | 8,349 | | | | 1,166,307 | | | | 151 |
| Total | | | $ | 18,411,089 | | | $ | 19,893,358 | | | $ | 64,628,066 | | | $ | 803,310,886 |
| |
| Derivatives | | | | | | | | | | | | | | | | |
| Level 1 | | | $ | — | | | $ | — | | | $ | — | | | $ | — |
| Level 2 | | | | (7,697 | ) | | | — | | | | (81,134 | ) | | | 40,313 |
| Level 3 | | | | — | | | | — | | | | — | | | | — |
| Total | | | $ | (7,697 | ) | | $ | — | | | $ | (81,134 | ) | | $ | 40,313 |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
| | The | | The | | The | | The |
| | Core Focus | | High-Yield | | Core Plus | | International |
| | Fixed Income | | Bond | | Fixed Income | | Equity |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Balance as of 10/31/08 | | | $ | 420,438 | | | | $ | 14,810 | | | | $ | 2,619,889 | | | | $ | 81,390 | |
| Net realized loss | | | | (14,569 | ) | | | | — | | | | | (261,668 | ) | | | | — | |
| Net change in unrealized appreciation/depreciation | | | | (8,396 | ) | | | | 31,879 | | | | | 220,065 | | | | | (81,239 | ) |
| Net purchases, sales and settlements | | | | (14,357 | ) | | | | 225 | | | | | (1,411,979 | ) | | | | — | |
| Net transfers in and/or out of Level 3 | | | | — | | | | | (38,565 | ) | | | | — | | | | | — | |
| Balance as of 4/30/09 | | | $ | 383,116 | | | | $ | 8,349 | | | | $ | 1,166,307 | | | | $ | 151 | |
|
| Net change in unrealized appreciation/depreciation | | | | | | | | | | | | | | | | | | | | |
| from investments still held as of 4/30/09 | | | $ | (17,362 | ) | | | $ | (6,686 | ) | | | $ | 23,545 | | | | $ | (81,239 | ) |
| | The | | | | The | | The | | The |
| | Labor Select | | The | | Global | | Global | | International |
| | International | | Emerging | | Real Estate | | Fixed | | Fixed |
| | Equity | | Markets | | Securities | | Income | | Income |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Securities | | | | | | | | | | | | | | | | | | | |
| Level 1 | | $ | 593,576,795 | | $ | 481,302,709 | | | $ | 52,684,748 | | | $ | 19,588,657 | | | $ | 205,000 | |
| Level 2 | | | 20,266,891 | | | 29,910,190 | | | | 8,084,888 | | | | 111,008,704 | | | | 16,034,866 | |
| Level 3 | | | 52 | | | 58 | | | | 42 | | | | 2 | | | | 193,868 | |
| Total | | $ | 613,843,738 | | $ | 511,212,957 | | | $ | 60,769,678 | | | $ | 130,597,363 | | | $ | 16,433,734 | |
| |
| Derivatives | | | | | | | | | | | | | | | | | | | |
| Level 1 | | $ | — | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Level 2 | | | 39,110 | | | (14,480 | ) | | | (5,458 | ) | | | (98,078 | ) | | | (11,017 | ) |
| Level 3 | | | — | | | — | | | | — | | | | — | | | | — | |
| Total | | $ | 39,110 | | $ | (14,480 | ) | | $ | (5,458 | ) | | $ | (98,078 | ) | | $ | (11,107 | ) |
2009 Semiannual report Ÿ Delaware Pooled Trust
114
3. Investments (continued)
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
| | The | | | | | | The | | The | | The |
| | Labor Select | | The | | Global | | Global | | International |
| | International | | Emerging | | Real Estate | | Fixed | | Fixed |
| | Equity | | Markets | | Securities | | Income | | Income |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Balance as of 10/31/08 | | $ | 28,153 | | | $ | 31,096 | | | $ | 22,442 | | | $ | 908 | | | $ | 337,550 | |
| Net realized gain | | | — | | | | — | | | | — | | | | — | | | | 39,433 | |
| Net change in unrealized appreciation/depreciation | | | (28,101 | ) | | | (31,038 | ) | | | (22,400 | ) | | | (906 | ) | | | (23,564 | ) |
| Net purchases, sales and settlements | | | — | | | | — | | | | — | | | | — | | | | (159,551 | ) |
| Balance as of 4/30/09 | | $ | 52 | | | $ | 58 | | | $ | 42 | | | $ | 2 | | | $ | 193,868 | |
| |
| Net change in unrealized appreciation/depreciation | | | | | | | | | | | | | | | | | | | | |
| from investments still held as of 4/30/09 | | $ | (28,101 | ) | | $ | (31,038 | ) | | $ | (22,400 | ) | | $ | (906 | ) | | $ | (23,564 | ) |
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Additionally, distributions from net gains on foreign currency transactions and net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended April 30, 2009 and the year ended October 31, 2008 was as follows:
| | Ordinary | | Long-Term | | | |
| | income | | capital gain | | Total |
| Six months ended April 30, 2009*: | | | | | | | | | |
| The Large-Cap Value Equity Portfolio | | $ | 237,317 | | $ | — | | $ | 237,317 |
| The Select 20 Portfolio | | | 15,482 | | | — | | | 15,482 |
| The Large-Cap Growth Equity Portfolio | | | 1,012,945 | | | — | | | 1,012,945 |
| The Mid-Cap Growth Equity Portfolio | | | — | | | 11,156 | | | 11,156 |
| The Small-Cap Growth Equity Portfolio | | | — | | | 1,114,784 | | | 1,114,784 |
| The Focus Smid-Cap Growth Equity Portfolio | | | 36,642 | | | — | | | 36,642 |
| The Smid-Cap Growth Equity Portfolio | | | 1,277 | | | — | | | 1,277 |
| The Real Estate Investment Trust Portfolio II | | | 295,942 | | | — | | | 295,942 |
| The Intermediate Fixed Income Portfolio | | | 174,904 | | | — | | | 174,904 |
| The Core Focus Fixed Income Portfolio | | | 1,521,244 | | | — | | | 1,521,244 |
| The High-Yield Bond Portfolio | | | 1,797,338 | | | — | | | 1,797,338 |
| The Core Plus Fixed Income Portfolio | | | 7,498,499 | | | — | | | 7,498,499 |
| The International Equity Portfolio | | | 88,883,940 | | | 115,268,847 | | | 204,152,787 |
| The Labor Select International Equity Portfolio | | | 45,429,859 | | | 21,959,941 | | | 67,389,800 |
| The Emerging Markets Portfolio | | | 18,520,515 | | | 77,714,200 | | | 96,234,715 |
| The Global Real Estate Securities Portfolio | | | 169,854 | | | — | | | 169,854 |
| The Global Fixed Income Portfolio | | | 31,311,090 | | | — | | | 31,311,090 |
| The International Fixed Income Portfolio | | | 2,146,073 | | | — | | | 2,146,073 |
*Tax information for the period ended April 30, 2009 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
2009 Semiannual report · Delaware Pooled Trust
(continues) 115
Notes to financial statements
Delaware Pooled® Trust
4. Dividend and Distribution Information (continued)
| | | Ordinary | | Long-Term | | Return | | | |
| | | income | | capital gain | | of capital | | Total |
| Year ended October 31, 2008: | | | | | | | | | | | |
| The Large-Cap Value Equity Portfolio | | $ | 281,784 | | $ | 819,349 | | — | | $ | 1,101,133 |
| The Large-Cap Growth Equity Portfolio | | | 615,128 | | | 3,836,740 | | — | | | 4,451,868 |
| The Mid-Cap Growth Equity Portfolio | | | 620,349 | | | 3,340,044 | | — | | | 3,960,393 |
| The Small-Cap Growth Equity Portfolio | | | 1,422,074 | | | 9,194,784 | | — | | | 10,616,858 |
| The Focus Smid-Cap Growth Equity Portfolio | | | 361,429 | | | 223,725 | | — | | | 585,154 |
| The Smid-Cap Growth Equity Portfolio | | | 21,748 | | | 182,724 | | — | | | 204,472 |
| The Real Estate Investment Trust Portfolio II | | | 1,886,204 | | | 3,458,097 | | — | | | 5,344,301 |
| The Intermediate Fixed Income Portfolio | | | 393,379 | | | — | | — | | | 393,379 |
| The Core Focus Fixed Income Portfolio | | | 2,889,431 | | | — | | — | | | 2,889,431 |
| The High-Yield Bond Portfolio | | | 1,527,622 | | | — | | — | | | 1,527,622 |
| The Core Plus Fixed Income Portfolio | | | 12,533,870 | | | — | | — | | | 12,533,870 |
| The International Equity Portfolio | | | 54,942,491 | | | 193,922,674 | | — | | | 248,865,165 |
| The Labor Select International Equity Portfolio | | | 27,454,273 | | | 131,100,861 | | — | | | 158,555,134 |
| The Emerging Markets Portfolio | | | 68,206,808 | | | 122,861,608 | | — | | | 191,068,416 |
| The Global Real Estate Securities Portfolio | | | 10,635,311 | | | — | | 1,123,054 | | | 11,758,365 |
| �� The Global Fixed Income Portfolio | | | 12,715,444 | | | — | | — | | | 12,715,444 |
| The International Fixed Income Portfolio | | | 1,709,358 | | | — | | — | | | 1,709,358 |
5. Components of Net Assets on a Tax Basis
The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of April 30, 2009, the estimated components of net assets on a tax basis were as follows:
| | | The | | | | | | | The | | The | | The |
| | | Large-Cap | | The | | Large-Cap | | Mid-Cap | | Small-Cap |
| | | Value Equity | | Select 20 | | Growth Equity | | Growth Equity | | Growth Equity |
| | | Portfolio | | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Shares of beneficial interest | | | $ | 12,909,774 | | | | $ | 17,410,067 | | | | $ | 345,882,522 | | | | $ | 4,347,248 | | | | $ | 2,844,633 | |
| Undistributed ordinary income | | | | 82,185 | | | | | — | | | | | 352,280 | | | | | — | | | | | — | |
| Realized losses 11/1/08 – 4/30/09 | | | | (630,532 | ) | | | | (2,155,824 | ) | | | | (54,515,425 | ) | | | | (496,608 | ) | | | | (2,253,924 | ) |
| Capital loss carryforwards as of 10/31/08 | | | | (1,656,222 | ) | | | | (4,791,884 | ) | | | | (16,131,381 | ) | | | | (175,111 | ) | | | | — | |
| Unrealized appreciation (depreciation) of investments | | | | (2,190,705 | ) | | | | (1,327,648 | ) | | | | (55,795,949 | ) | | | | 20,826 | | | | | (8,979 | ) |
| Net assets | | | $ | 8,514,500 | | | | $ | 9,134,711 | | | | $ | 219,792,047 | | | | $ | 3,696,355 | | | | $ | 581,730 | |
| | | The | | The | | The | | The |
| | | Focus Smid-Cap | | Smid-Cap | | Real Estate | | Intermediate |
| | | Growth Equity | | Growth Equity | | Investment Trust | | Fixed Income |
| | | Portfolio | | Portfolio | | Portfolio II* | | Portfolio |
| Shares of beneficial interest | | $ | 5,107,112 | | | $ | 714,878 | | | $ | 9,271,477 | | | $ | 7,736,903 | |
| Undistributed ordinary income | | | — | | | | — | | | | 200,860 | | | | (5,938 | ) |
| Realized gains (losses) 11/1/08 – 4/30/09 | | | (978,221 | ) | | | (693,180 | ) | | | (1,179,176 | ) | | | 29,835 | |
| Capital loss carryforwards as of 10/31/08 | | | (636,923 | ) | | | (18,808 | ) | | | (1,236,492 | ) | | | (589,782 | ) |
| Unrealized depreciation of investments | | | (619,585 | ) | | | (2,878 | ) | | | (2,751,812 | ) | | | (305,409 | ) |
| Net assets | | $ | 2,872,383 | | | $ | 12 | | | $ | 4,304,857 | | | $ | 6,865,609 | |
2009 Semiannual report · Delaware Pooled Trust
116
5. Components of Net Assets on a Tax Basis (continued)
| | The | | The | | The | | The |
| | Core Focus | | High-Yield | | Core Plus | | International |
| | Fixed Income | | Bond | | Fixed Income | | Equity |
| | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| Shares of beneficial interest | | | $ | 18,614,887 | | | | $ | 26,803,851 | | | | $ | 70,542,553 | | | | $ | 1,141,593,720 | |
| Undistributed ordinary income | | | | 429,577 | | | | | 658,988 | | | | | 1,403,355 | | | | | 8,804,966 | |
| Realized losses 11/1/08 – 4/30/09 | | | | (779,649 | ) | | | | (3,397,251 | ) | | | | (3,124,682 | ) | | | | (165,306,605 | ) |
| Capital loss carryforwards as of 10/31/08 | | | | (422,809 | ) | | | | (3,884,840 | ) | | | | (5,421,304 | ) | | | | — | |
| Other temporary differences | | | | — | | | | | — | | | | | (39,979 | ) | | | | — | |
| Unrealized depreciation of investments and | | | | | | | | | | | | | | | | | | | | |
| foreign currencies | | | | (1,063,108 | ) | | | | (1,144,448 | ) | | | | (4,508,753 | ) | | | | (214,704,482 | ) |
| Net assets | | | $ | 16,778,898 | | | | $ | 19,036,300 | | | | $ | 58,851,190 | | | | $ | 770,387,599 | |
| | The | | | | | | The | | The | | The |
| | Labor Select | | The | | Global | | Global | | International |
| | International | | Emerging | | Real Estate | | Fixed | | Fixed |
| | Equity | | Markets | | Securities | | Income | | Income |
| | Portfolio | | Portfolio | | Portfolio* | | Portfolio | | Portfolio |
| Shares of beneficial interest | | $ | 867,412,627 | | | $ | 683,698,232 | | | $ | 174,916,763 | | | $ | 135,719,886 | | | $ | 17,204,229 | |
| Undistributed ordinary income | | | 7,054,534 | | | | 2,576,283 | | | | 1,854,656 | | | | 1,399,205 | | | | 1,090,864 | |
| Realized losses 11/1/08 – 4/30/09 | | | (85,233,291 | ) | | | (36,572,313 | ) | | | (47,255,855 | ) | | | (134,144 | ) | | | (57,578 | ) |
| Capital loss carryforwards as of 10/31/08 | | | — | | | | — | | | | (54,944,662 | ) | | | (1,174,683 | ) | | | (1,234,534 | ) |
| Other temporary differences | | | — | | | | | | | | — | | | | (218,869 | ) | | | (23,341 | ) |
| Unrealized depreciation of investments and | | | | | | | | | | | | | | | | | | | | |
| foreign currencies | | | (193,030,576 | ) | | | (157,424,772 | ) | | | (26,927,386 | ) | | | (2,142,525 | ) | | | (167,568 | ) |
| Net assets | | $ | 596,203,294 | | | $ | 492,277,430 | | | $ | 47,643,516 | | | $ | 133,448,870 | | | $ | 16,812,072 | |
*The undistributed earnings for The Real Estate Investment Trust Portfolio II and The Global Real Estate Securities Portfolio are estimated pending final notification of the tax character of distributions received from investments in Real Estate Investment Trusts.
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales, mark-to-market on futures contracts, mark to market on forward foreign currency contracts, straddle loss deferrals, tax recognition of unrealized gain on passive foreign investment companies, contingent payment debt instruments and the tax treatment of market discount and premium on debt instruments, and CDS contracts.
2009 Semiannual report · Delaware Pooled Trust
(continues) 117
Notes to financial statements
Delaware Pooled® Trust
5. Components of Net Assets on a Tax Basis (continued)
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of net operating losses, in-kind distributions of shareholder redemptions, gain (loss) on foreign currency transactions, dividends and distributions, market discount and premium on certain debt instruments, passive foreign investment companies, CDS and interest rate swaps and paydown gains (losses) on mortgage- and asset-backed securities. Results of operations and net assets were not affected by these reclassifications. For the six months ended April 30, 2009, the Portfolios recorded an estimate of these differences since the final tax characteristics cannot be determined until fiscal year end.
| | | Undistributed | | | | | | | | |
| | | (distributions in excess of) | | Accumulated | | | | |
| | | net investment | | net realized | | Paid-in |
| | | income (loss) | | gain (loss) | | capital |
| The Select 20 Portfolio | | $ | 10,979 | | | $ | (1,622 | ) | | $ | (9,357 | ) |
| The Mid-Cap Growth Equity Portfolio | | | 4,046 | | | | 11,156 | | | | (15,202 | ) |
| The Small-Cap Growth Equity Portfolio | | | 6,740 | | | | 9,513 | | | | (16,253 | ) |
| The Focus Smid-Cap Growth Equity Portfolio | | | (601 | ) | | | 4,246 | | | | (3,645 | ) |
| The Smid-Cap Growth Equity Portfolio | | | 2,632 | | | | — | | | | (2,632 | ) |
| The Intermediate Fixed Income Portfolio | | | 1,027 | | | | (1,027 | ) | | | — | |
| The Core Focus Fixed Income Portfolio | | | (695 | ) | | | 695 | | | | — | |
| The High-Yield Bond Portfolio | | | (94,633 | ) | | | 94,633 | | | | — | |
| The Core Plus Fixed Income Portfolio | | | (519,261 | ) | | | 519,261 | | | | — | |
| The International Equity Portfolio | | | 1,046,414 | | | | 8,192,487 | | | | (9,238,901 | ) |
| The Labor Select International Equity Portfolio | | | 184,265 | | | | (184,265 | ) | | | — | |
| The Emerging Markets Portfolio | | | (501,257 | ) | | | 501,257 | | | | — | |
| The Global Real Estate Securities Portfolio | | | (185,122 | ) | | | 185,122 | | | | — | |
| The Global Fixed Income Portfolio | | | (88,830 | ) | | | 216,386 | | | | (127,556 | ) |
| The International Fixed Income Portfolio | | | 948,216 | | | | (948,216 | ) | | | — | |
2009 Semiannual report · Delaware Pooled Trust
118
5. Components of Net Assets on a Tax Basis (continued)
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at October 31, 2008 will expire as follows:
| | Year of expiration |
| | 2009 | | 2010 | | 2011 | | 2013 | | 2014 | | 2015 | | 2016 | | Total |
| The Large-Cap Value | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Portfolio | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 1,656,222 | | $ | 1,656,222 |
| The Select 20 Portfolio | | | 2,003,306 | | | 2,008,163 | | | 596,717 | | | — | | | 76,954 | | | — | | | 106,744 | | | 4,791,884 |
| The Large-Cap Growth | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Portfolio | | | — | | | — | | | — | | | — | | | — | | | — | | | 16,131,381 | | | 16,131,381 |
| The Mid-Cap Growth | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Portfolio | | | — | | | — | | | — | | | — | | | — | | | — | | | 175,111 | | | 175,111 |
| The Focus Smid-Cap Growth | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Portfolio | | | — | | | — | | | — | | | — | | | — | | | — | | | 636,923 | | | 636,923 |
| The Smid-Cap Growth | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity Portfolio | | | — | | | — | | | — | | | — | | | — | | | — | | | 18,808 | | | 18,808 |
| The Real Estate Investment | | | | | | | | | | | | | | | | | | | | | | | | |
| Trust Portfolio II | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,236,492 | | | 1,236,492 |
| The Intermediate | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed Income Portfolio | | | — | | | 26,277 | | | — | | | 112,676 | | | 177,899 | | | 272,930 | | | — | | | 589,782 |
| The Core Focus | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed Income Portfolio | | | — | | | — | | | — | | | — | | | 289,534 | | | — | | | 133,275 | | | 422,809 |
| The High-Yield | | | | | | | | | | | | | | | | | | | | | | | | |
| Bond Portfolio | | | 612,814 | | | 331,046 | | | — | | | — | | | — | | | 358,729 | | | 2,582,251 | | | 3,884,840 |
| The Core Plus Fixed | | | | | | | | | | | | | | | | | | | | | | | | |
| Income Portfolio | | | — | | | — | | | — | | | 394,175 | | | 1,651,932 | | | 1,588,204 | | | 1,786,993 | | | 5,421,304 |
| The Global Real Estate | | | | | | | | | | | | | | | | | | | | | | | | |
| Securities Portfolio | | | — | | | — | | | — | | | — | | | — | | | 1,245,667 | | | 53,698,995 | | | 54,944,662 |
| The Global Fixed | | | | | | | | | | | | | | | | | | | | | | | | |
| Income Portfolio | | | — | | | — | | | — | | | — | | | 167,312 | | | — | | | 1,007,371 | | | 1,174,683 |
| The International | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed Income Portfolio | | | 895,235 | | | — | | | — | | | — | | | 318,010 | | | — | | | 21,289 | | | 1,234,534 |
For the six months ended April 30, 2009, the Portfolios had the following capital gains (losses), which may reduce (increase) the capital loss carryforwards.
| The Large-Cap Value Equity Portfolio | $ | (630,532 | ) |
| The Select 20 Portfolio | | (2,155,824 | ) |
| The Large-Cap Growth Equity Portfolio | | (54,515,425 | ) |
| The Mid-Cap Growth Equity Portfolio | | (496,608 | ) |
| The Focus Smid-Cap Growth Equity Portfolio | | (978,221 | ) |
| The Smid-Cap Growth Equity Portfolio | | (693,180 | ) |
| The Real Estate Investment Trust Portfolio II | | (1,179,176 | ) |
| The Intermediate Fixed Income Portfolio | | 29,835 | |
| The Core Focus Fixed Income Portfolio | | (779,649 | ) |
| The High-Yield Bond Portfolio | | (3,397,251 | ) |
| The Core Plus Fixed Income Portfolio | | (3,124,682 | ) |
| The Global Real Estate Securities Portfolio | | (47,255,855 | ) |
| The Global Fixed Income Portfolio | | (134,144 | ) |
| The International Fixed Income Portfolio | | (57,578 | ) |
2009 Semiannual report · Delaware Pooled Trust
(continues) 119
Notes to financial statements
Delaware Pooled® Trust
6. Capital Shares
Transactions in capital shares were as follows:
| | | | | Shares issued | | | | | | |
| | | | | upon reinvestment | | | | | Net |
| | | Shares | | of dividends | | Shares | | increase |
| | | sold | | and distributions | | repurchased | | (decrease) |
| Six Months ended April 30, 2009: | | | | | | | | | | |
| The Large-Cap Value Equity Portfolio | | 1,880 | | 18,672 | | — | | | 20,552 | |
| The Select 20 Portfolio | | — | | 3,827 | | (42,491 | ) | | (38,664 | ) |
| The Large-Cap Growth Equity Portfolio | | 1,723,108 | | 140,889 | | (7,995,899 | ) | | (6,131,902 | ) |
| The Mid-Cap Growth Equity Portfolio | | 500,751 | | 21,455 | | — | | | 522,206 | |
| The Small-Cap Growth Equity Portfolio | | 124,639 | | 466,953 | | (2,057,397 | ) | | (1,465,805 | ) |
| The Focus Smid-Cap Growth Equity Portfolio | | 21,079 | | 5,376 | | (274,110 | ) | | (247,655 | ) |
| The Smid-Cap Growth Equity Portfolio | | — | | 235 | | (255,595 | ) | | (255,360 | ) |
| The Real Estate Investment Trust Portfolio II | | — | | 85,041 | | — | | | 85,041 | |
| The Intermediate Fixed Income Portfolio | | 10,617 | | 16,567 | | (41,955 | ) | | (14,771 | ) |
| The Core Focus Fixed Income Portfolio | | 49,628 | | 100,328 | | (1,806,449 | ) | | (1,656,493 | ) |
| The High-Yield Bond Portfolio | | 228,571 | | 391,577 | | (915,240 | ) | | (295,092 | ) |
| The Core Plus Fixed Income Portfolio | | — | | 947,977 | | (7,309,034 | ) | | (6,361,057 | ) |
| The International Equity Portfolio | | 12,313,833 | | 10,937,486 | | (22,797,394 | ) | | 453,925 | |
| The Labor Select International Equity Portfolio | | 1,950,393 | | 6,309,907 | | (601,758 | ) | | 7,658,542 | |
| The Emerging Markets Portfolio | | 2,200,232 | | 16,012,486 | | (9,268,766 | ) | | 8,943,952 | |
| The Global Real Estate Securities Portfolio Original Class | | 3,654,709 | | 43,008 | | (10,996,784 | ) | | (7,299,067 | ) |
| The Global Real Estate Securities Portfolio Class P | | — | | — | | — | | | — | |
| The Global Fixed Income Portfolio | | 437,929 | | 2,646,718 | | (4,319,136 | ) | | (1,234,489 | ) |
| The International Fixed Income Portfolio | | — | | 191,956 | | (1,196,911 | ) | | (1,004,955 | ) |
| |
| |
| | | | | Shares issued | | | | | | |
| | | | | upon reinvestment | | | | | Net |
| | | Shares | | of dividends | | Shares | | increase |
| | | sold | | and distributions | | repurchased | | (decrease) |
| Year ended October 31, 2008: | | | | | | | | | | |
| The Large-Cap Value Equity Portfolio | | 248,293 | | 57,050 | | (27,297 | ) | | 278,046 | |
| The Select 20 Portfolio | | 1,828,814 | | — | | — | | | 1,828,814 | |
| The Large-Cap Growth Equity Portfolio | | 4,759,131 | | 414,807 | | (7,286,730 | ) | | (2,112,792 | ) |
| The Mid-Cap Growth Equity Portfolio | | 5 | | 4,304,771 | | — | | | 4,304,776 | |
| The Small-Cap Growth Equity Portfolio | | 236,832 | | 1,534,658 | | (1,088,549 | ) | | 682,941 | |
| The Focus Smid-Cap Growth Equity Portfolio | | 429,881 | | 19,682 | | (568,234 | ) | | (118,671 | ) |
| The Smid-Cap Growth Equity Portfolio | | — | | 20,066 | | — | | | 20,066 | |
| The Real Estate Investment Trust Portfolio II | | 321,257 | | 750,463 | | (942,993 | ) | | 128,727 | |
| The Intermediate Fixed Income Portfolio | | 14,472 | | 35,282 | | (710,797 | ) | | (661,043 | ) |
| The Core Focus Fixed Income Portfolio | | 65,344 | | 206,232 | | (1,099,355 | ) | | (827,779 | ) |
| The High-Yield Bond Portfolio | | 2,061,827 | | 208,977 | | (1,384,747 | ) | | 886,057 | |
| The Core Plus Fixed Income Portfolio | | 1,746,891 | | 1,424,303 | | (9,685,072 | ) | | (6,513,878 | ) |
| The International Equity Portfolio | | 7,078,732 | | 6,768,880 | | (31,445,785 | ) | | (17,598,173 | ) |
| The Labor Select International Equity Portfolio | | 3,669,212 | | 8,073,072 | | (4,743,799 | ) | | 6,998,485 | |
| The Emerging Markets Portfolio | | 2,463,167 | | 13,786,118 | | (5,657,977 | ) | | 10,591,308 | |
| The Global Real Estate Securities Portfolio Original Class | | 12,913,905 | | 1,555,290 | | (31,861,897 | ) | | (17,392,702 | ) |
| The Global Real Estate Securities Portfolio Class P | | — | | 49 | | — | | | 49 | |
| The Global Fixed Income Portfolio | | 1,793,544 | | 877,071 | | (12,010,423 | ) | | (9,339,808 | ) |
| The International Fixed Income Portfolio | | — | | 152,485 | | (315,327 | ) | | (162,842 | ) |
2009 Semiannual report · Delaware Pooled Trust
120
7. Line of Credit
The Portfolios, along with certain other funds in the Delaware Investments® Family of Funds (Participants), were participants in a $225,000,000 revolving line of credit with BNY Mellon to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, Participants were charged an annual commitment fee, which is allocated across the Participants on the basis of each Participant’s allocation of the entire facility. Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement expired on November 18, 2008.
Effective as of November 18, 2008, the Portfolios along with the other Participants entered into an amendment to the agreement with BNY Mellon for a $35,000,000 revolving line of credit. The agreement, as amended, is to be used as described above and operates in substantially the same manner as the original agreement. The agreement, as amended, expires on November 17, 2009. The Portfolios had no amounts outstanding as of April 30, 2009, or at any time during the period then ended.
8. Foreign Currency Exchange Contracts
The Select 20, The Large-Cap Growth Equity, The Small-Cap Growth Equity, The Focus Smid-Cap Growth Equity, The Smid-Cap Growth Equity, The Real Estate Investment Trust II, The Intermediate Fixed Income, The Core Focus Fixed Income, The High-Yield Bond, The Core Plus Fixed Income, The International Equity, The Labor Select International Equity, The Emerging Markets, The Global Real Estate Securities, The Global Fixed Income, and The International Fixed Income Portfolios may enter into foreign currency exchange contracts and foreign cross-currency exchange contracts as a way of managing foreign exchange rate risk. The Portfolios may enter into these contracts to fix the U.S. dollar value of a security that they have 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 Portfolios may also use these contracts to hedge the U.S. dollar value of securities they already own that are denominated in foreign currencies. The change in market 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 limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Portfolios could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts.
9. Futures Contracts
The Select 20, The Large-Cap Growth Equity, The Mid-Cap Growth Equity, The Small-Cap Growth Equity, The Focus Smid-Cap Growth Equity, The Smid-Cap Growth Equity, The Real Estate Investment Trust II, The Intermediate Fixed Income, The Core Focus Fixed Income, The Core Plus Fixed Income, The Emerging Markets, The Global Real Estate Securities, and The International Fixed Income Portfolios may invest in financial futures contracts to hedge their existing portfolio securities against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, a Portfolio deposits cash or pledges U.S. government securities to a broker, equal to the minimum “initial margin” requirements of the exchange on which the contract is traded. Subsequent payments are received from the broker or paid to the broker each day, based on the daily fluctuation in the market value of the contract. These receipts or payments are known as “variation margin” and are recorded daily by each Portfolio as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Risks of entering into futures contracts include potential imperfect correlation between the futures contracts and the underlying securities and the possibility of an illiquid secondary market for these instruments.
10. Written Options
During the six months ended April 30, 2009, The Intermediate Fixed Income Portfolio, The Core Focus Fixed Income Portfolio, and The Core Plus Fixed Income Portfolio entered into options contracts in accordance with their investment objectives. When a Portfolio writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Portfolio 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 a Portfolio has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by a Portfolio. A Portfolio, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.
2009 Semiannual report · Delaware Pooled Trust
(continues) 121
Notes to financial statements
Delaware Pooled® Trust
10. Written Options (continued)
The Intermediate Fixed Income Portfolio
| | Number of | | | | |
| | contracts | | Premiums |
| Options outstanding at October 31, 2008 | | 54 | | | $ | 36,640 | |
| Options terminated in closing purchase transactions | | (54 | ) | | | (36,640 | ) |
| Options outstanding at April 30, 2009 | | — | | | $ | — | |
| |
| The Core Focus Fixed Income Portfolio | | | | | | | |
| | | | | | | |
| | | Number of | | | | |
| | | contracts | | Premiums |
| Options outstanding at October 31, 2008 | | 210 | | | $ | 143,417 | |
| Options terminated in closing purchase transactions | | (210 | ) | | | (143,417 | ) |
| Options outstanding at April 30, 2009 | | — | | | $ | — | |
11. Swap Contracts
The Intermediate Fixed Income Portfolio, The Core Focus Fixed Income Portfolio, and The Core Plus Fixed Income Portfolio may enter into interest rate swap contracts and index swap contracts in accordance with their investment objectives. These Portfolios and The High-Yield Bond Portfolio may enter into credit default swap (CDS) contracts in accordance with their investment objectives. The Portfolios may use interest rate swaps to adjust the Portfolios’ sensitivity to interest rates or to hedge against changes in interest rates. Index swaps may be used to gain exposure to markets that the Portfolios invest in, such as the corporate bond market. The Portfolios may also use index swaps as a substitute for futures or options contracts if such contracts are not directly available to the Portfolios on favorable terms. The Portfolios 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.
An interest rate swap involves payments received by the Portfolio from another party based on a variable or floating interest rate, in return for making payments based on a fixed interest rate. An interest rate swap can also work in reverse with the Portfolio receiving payments based on a fixed interest rate and making payments based on a variable or floating interest rate. Interest rate swaps may be used to adjust the Portfolio’s sensitivity to interest rates or to hedge against changes in interest rates. Periodic payments on such contracts are accrued daily and recorded as unrealized appreciation/depreciation on swap contracts. Upon periodic payment/receipt or termination of the contract, such amounts are recorded as realized gains or losses on swap contracts.
Index swaps involve commitments to pay interest in exchange for a market-linked return based on a notional amount. To the extent the total return of the security, instrument or basket of instruments underlying the transaction exceeds the offsetting interest obligation, each Portfolio will receive a payment from the counterparty. To the extent the total return of the security, instrument or basket of instruments underlying the transaction falls short of the offsetting interest obligation, each Portfolio will make a payment to the counterparty. The change in value of swap contracts outstanding, if any, is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded on maturity or termination of the swap contract.
A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular referenced 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 Portfolio 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 referenced security (or basket of securities) to the counterparty.
During the six months ended April 30, 2009, the Portfolios entered into CDS contracts as purchasers and sellers of protection. Periodic payments on such contracts are accrued daily and recorded as unrealized losses on swap contracts. Upon payment, such amounts are recorded as realized losses on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as realized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event or the maturity or termination of the agreement.
2009 Semiannual report · Delaware Pooled Trust
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11. Swap Contracts (continued)
Credit default swaps may involve greater risks than if a Portfolio had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If a Portfolio enters into a CDS contract as a purchaser of protection and no credit event occurs, its exposure is limited to the periodic payments previously made to the counterparty.
Because there is no organized market for swap contracts, the value of open swaps may differ from that which would be realized in the event a Portfolio terminated its position in the agreement. Risks of entering into these agreements 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 movements 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 statements of net assets.
12. Securities Lending
The Portfolios, along with other funds in the Delaware Investments® Family of Funds, may lend their securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. With respect to each loan, if the aggregate market value of securities collateral held plus cash collateral received on any business day 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 not less than the applicable collateral requirements. Cash collateral received is generally invested in the Mellon GSL DBT II Collateral Fund (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of clients participating in its securities lending programs. The Collective Trust may invest in fixed income securities, with a weighted average maturity not to exceed 90 days, rated in one of the top three tiers by Standard & Poor’s Ratings Group (S&P) or Moody’s Investors Service, Inc. (Moody’s) or repurchase agreements collateralized by such securities. The Collective Trust seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. At April 30, 2009, the Collective Trust held only cash and assets with a maturity of one business day or less (Cash/Overnight Assets). The Portfolios may incur investment losses as a result of investing securities lending collateral in the Collective Trust. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, a portfolio may not receive an amount from the Collective Trust that is equal in amount to the collateral the Portfolio would be required to return to the borrower of the securities and the Portfolio would be required to make up for this shortfall. Effective April 20, 2009, BNY Mellon transferred the assets of the Collective Trust other than the Cash/Overnight Assets to the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), effectively bifurcating the collateral investment pool. The Portfolios’ exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. In October 2008, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL Reinvestment Trust II. The Portfolios can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Portfolios, or at the discretion of the lending agent, replace the loaned securities. The Portfolios continue to record dividends or interest, as applicable, on the securities loaned and are subject to change in value of the securities loaned that may occur during the term of the loan. The Portfolios have the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Portfolios receive 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 Portfolios, the security lending agent and the borrower. The Portfolios record security lending income net of allocations to the security lending agent and the borrower.
2009 Semiannual report · Delaware Pooled Trust
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Notes to financial statements
Delaware Pooled® Trust
12. Securities Lending (continued)
At April 30, 2009, the market value of securities on loan is presented below, for which the Portfolios received collateral, comprised of securities collateral and cash collateral. Investments purchased with cash collateral are presented on the statements of net assets under the caption “Securities Lending Collateral.”
| | Market value | | | | | Cash |
| | of securities | | Securities | | collateral |
| | on loan | | collateral | | received |
| The Large-Cap Value Equity Portfolio | | $ | — | | $ | — | | $ | 426 |
| The Select 20 Portfolio | | | — | | | — | | | 17,004 |
| The Large-Cap Growth Equity Portfolio | | | 11,172,018 | | | — | | | 11,487,072 |
| The Mid-Cap Growth Equity Portfolio | | | — | | | — | | | 3,905 |
| The Small-Cap Growth Equity Portfolio | | | — | | | — | | | 6,426 |
| The Focus Smid-Cap Growth Equity Portfolio | | | — | | | — | | | 13,796 |
| The Smid-Cap Growth Equity Portfolio | | | — | | | — | | | 2,878 |
| The Real Estate Investment Trust Portfolio II | | | — | | | — | | | 6,565 |
| The Intermediate Fixed Income Portfolio | | | — | | | — | | | 15,574 |
| The Core Focus Fixed Income Portfolio | | | 1,526,395 | | | — | | | 1,556,578 |
| The High-Yield Bond Portfolio | | | 1,294,777 | | | 29,200 | | | 1,299,639 |
| The Core Plus Fixed Income Portfolio | | | 1,809,672 | | | 24,250 | | | 1,826,799 |
| The International Equity Portfolio | | | 36,380,929 | | | — | | | 38,242,739 |
| The Labor Select International Equity Portfolio | | | 20,343,377 | | | — | | | 21,385,210 |
| The Emerging Markets Portfolio | | | 27,589,040 | | | — | | | 28,779,507 |
| The Global Real Estate Securities Portfolio | | | 8,329,445 | | | — | | | 8,694,698 |
| The Global Fixed Income Portfolio | | | — | | | — | | | 16,817 |
| The International Fixed Income Portfolio | | | — | | | — | | | 23,898 |
13. Credit and Market Risk
Some countries in which The International Equity, The Labor Select International Equity, The Emerging Markets, The Global Real Estate Securities, The Global Fixed Income, and The International Fixed Income Portfolios 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 Portfolios 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 Portfolios.
The High-Yield Bond Portfolio invests a portion of its assets in high yield fixed income securities, which carry ratings of BB or lower by S&P and/or Ba or lower by Moody’s. 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 Intermediate Fixed Income, The Core Focus Fixed Income, The Core Plus Fixed Income, The Global Real Estate Securities, and The Global Fixed Income Portfolios invest 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 collateralized mortgage obligations (CMOs). CMOs are debt securities issued by U.S. 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 Portfolios’ yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Portfolios may fail to fully recoup their initial investments in these securities even if the securities are rated in the highest rating categories.
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124
13. Credit and Market Risk (continued)
The Mid-Cap Growth Equity, The International Equity, and The Global Fixed Income Portfolios may invest up to 10% of each Portfolio’s net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The Large-Cap Value Equity, The Select 20, The Large-Cap Growth Equity, The Small-Cap Growth Equity, The Focus Smid-Cap Growth Equity, The Smid-Cap Growth Equity, The Real Estate Investment Trust II, The Intermediate Fixed Income, The Core Focus Fixed Income, The High-Yield Bond, The Core Plus Fixed Income, The Labor Select International Equity, The Emerging Markets, The Global Real Estate Securities, and The International Fixed Income Portfolios may invest up to 15% of each Portfolio’s net assets in such securities. The relative illiquidity of these securities may impair each Portfolio 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 Portfolios’ Board of Trustees has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Portfolios’ limitation on investments in illiquid assets. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Portfolios’ limit on investments in illiquid securities. Rule 144A and illiquid securities have been identified on the statements of net assets.
The Select 20, The Mid-Cap Growth Equity, The Small-Cap Growth Equity, The Focus Smid-Cap Growth Equity, The Smid-Cap Growth Equity, and The Global Real Estate Securities Portfolios invest a significant portion of their assets in small- and mid-sized companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small- or mid-sized companies may be more volatile than investments in larger companies for a number of reasons, which include more limited financial resources or a dependence on narrow product lines.
The Real Estate Investment Trust Portfolio II and The Global Real Estate Securities Portfolio concentrate their investments in the real estate industry and are subject to the risks associated with that industry. If a Portfolio 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. These Portfolios are also affected by interest rate changes, particularly if the real estate investment trusts they hold use floating rate debt to finance their ongoing operations. Each Portfolio’s investments may also tend to fluctuate more in value than a portfolio that invests in a broader range of industries.
14. Contractual Obligations
The Portfolios enter into contracts in the normal course of business that contain a variety of indemnifications. The Portfolios’ maximum exposure under these arrangements is unknown. However, the Portfolios have not had prior claims or losses pursuant to these contracts. Management has reviewed the Portfolios’ existing contracts and expects the risk of loss to be remote.
15. In-Kind Redemptions
During the six months ended April 30, 2009, the International Equity Portfolio satisfied withdrawal requests with transfers of securities and cash totaling $37,330,780, resulting in a net realized loss of $9,238,901 and the Global Fixed Income Portfolio satisfied withdrawal requests with transfers of securities and cash totaling $18,643,044 resulting in a net realized loss of $127,221.
16. Subsequent Events
On May 21, 2009, the Board of the Trust unanimously voted and approved a proposal to liquidate and dissolve The Smid-Cap Growth Equity Portfolio. The Portfolio has no public shareholders, and, therefore, the Portfolio will be liquidated promptly. As a result of the decision to pursue liquidation and dissolution of the Portfolio, as of June 1, 2009, the Portfolio will be closed to new investors and all sales efforts will cease.
On May 21, 2009, the Board of Trustees responsible for The Intermediate Fixed Income Portfolio (the “Reorganizing Fund”) approved a proposal to reorganize the Reorganizing Fund with and into a newly organized fund, Delaware Core Bond Fund (the “Acquiring Fund”), a series of Delaware Group® Income Funds, subject to shareholder approval. The Board of Trustees responsible for the Acquiring Fund also approved the reorganization.
The Reorganizing Fund’s investment objective is the same as that of the Acquiring Fund. The Reorganizing Fund seeks maximum long-term total return, consistent with reasonable risk. The investment policies of the Reorganizing Fund are similar to those of the Acquiring Fund. The Acquiring Fund will be managed by the same investment personnel.
The expenses of the Acquiring Fund are expected to be consistent with the retail funds within Delaware Investments® Family of Funds and therefore higher than those of the Reorganizing Fund.
Effective as of the close of business on May 29, 2009, the Reorganizing Fund will be closed to new investors. Reorganizing Fund shareholders will receive materials providing them with information about the Acquiring Fund. It is anticipated that a majority of the Reorganizing Fund’s shareholders will approve the Reorganization by written consent without the Reorganizing Fund having to solicit proxies from all the Reorganizing Fund’s shareholders. The reorganization is expected to take place in September 2009. Additionally, the Reorganizing Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until the last business day before the proposed reorganization.
2009 Semiannual report · Delaware Pooled Trust
125
Fund officers and portfolio managers
| Patrick P. Coyne | Roger A. Early | Nigel G. May |
| Chairman, President, and | Senior Vice President and | Director and Chief Investment Officer — |
| Chief Executive Officer — | Co-Chief Investment Officer — | Developed Equity Markets |
| Delaware Investments® Family of Funds | Total Return Fixed Income Strategy | Mondrian Investment Partners Limited |
| |
| Robert Akester | Christopher M. Ericksen | Victor Mostrowski |
| Senior Portfolio Manager | Vice President, Portfolio Manager, and | Vice President and Portfolio Manager — |
| Mondrian Investment Partners Limited | Equity Analyst | International Debt |
| |
| Damon J. Andres | Patrick G. Fortier | Christopher A. Moth |
| Vice President and Senior Portfolio | Vice President, Portfolio Manager, and | Director and Chief Investment Officer — |
| Manager | Equity Analyst | Global Fixed Income and Currency |
| | | Mondrian Investment Partners Limited |
| Kristen E. Bartholdson | Clive A. Gillmore | |
| Vice President and Portfolio Manager | Chief Executive Officer | D. Tysen Nutt Jr. |
| | Mondrian Investment Partners Limited | Senior Vice President, Senior Portfolio |
| Fiona A. Barwick | | Manager, and Team Leader — Large-Cap |
| Director of Regional Research | Barry S. Gladstein | Value Focus Equity |
| Mondrian Investment Partners Limited | Vice President and Portfolio Manager | |
| | | Daniel J. Prislin |
| Marshall T. Bassett | Paul Grillo | Vice President, Senior Portfolio Manager, |
| Senior Vice President and Chief | Senior Vice President and | and Equity Analyst |
| Investment Officer — Emerging Growth | Co-Chief Investment Officer — | |
| Equity | Total Return Fixed Income Strategy | David G. Tilles |
| | | Executive Chairman |
| Joanna Bates | Gregory M. Heywood | Mondrian Investment Partners Limited |
| Senior Portfolio Manager | Vice President, Portfolio Manager, and | |
| Mondrian Investment Partners Limited | Equity Analyst | Rudy D. Torrijos III |
| | | Vice President and Portfolio Manager |
| Nigel Bliss | Christopher M. Holland | |
| Senior Portfolio Manager | Vice President and Portfolio Manager | Michael S. Tung, M.D. |
| Mondrian Investment Partners Limited | | Vice President, Portfolio Manager, and |
| | John Kirk | Equity Analyst |
| Christopher J. Bonavico | Director and Senior Portfolio Manager | |
| Vice President, Senior Portfolio Manager, | Mondrian Investment Partners Limited | Jeffrey S. Van Harte |
| and Equity Analyst | | Senior Vice President and Chief |
| | Nikhil G. Lalvani | Investment Officer — Focus Growth Equity |
| Kenneth F. Broad | Vice President and Portfolio Manager | |
| Vice President, Senior Portfolio Manager, | | Robert A. Vogel Jr. |
| and Equity Analyst | Emma R. E. Lewis | Vice President and Senior Portfolio |
| | Senior Portfolio Manager | Manager |
| Thomas H. Chow | Mondrian Investment Partners Limited | |
| Senior Vice President and Senior Portfolio | | Lori P. Wachs |
| Manager | Anthony A. Lombardi | Vice President and Portfolio Manager |
| | Vice President and Senior Portfolio | |
| Elizabeth A. Desmond | Manager | Nashira S. Wynn |
| Director and Chief Investment Officer — | | Vice President and Portfolio Manager |
| Developed Equity Markets | Kevin P. Loome | |
| Mondrian Investment Partners Limited | Senior Vice President, Senior Portfolio | Babak (Bob) Zenouzi |
| | Manager, and Head of High Yield | Senior Vice President and Senior Portfolio |
| Chuck M. Devereux | Investments | Manager |
| Senior Vice President and Director of | | |
| Credit Research | | |
| Custodian |
| The Bank of New York Mellon |
| One Wall Street |
| New York, NY 10286 |
| |
| Independent Registered Public Accounting Firm |
| Ernst & Young LLP |
| 2001 Market Street |
| Philadelphia, PA 19103 |
| |
| Investment Advisor |
| Delaware Management Company, a series of Delaware Management Business Trust |
| 2005 Market Street |
| Philadelphia, PA 19103 |
| |
| Investment Sub-advisor for certain Portfolios |
| Mondrian Investment Partners Limited |
| Fifth Floor |
| 10 Gresham Street |
| London EC2V 7JD |
| United Kingdom |
Each Portfolio files its complete schedule of Portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. Each Portfolio’s Forms N-Q, as well as a description of the policies and procedures that each Portfolio uses to determine how to vote proxies (if any) relating to Portfolio securities are available without charge (i) upon request, by calling 800 523-1918; (ii) on the Portfolios’ Web site at www.delawareinvestments.com; and (iii) on the Commission’s Web site at www.sec.gov. Each Portfolio’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how each Portfolio voted proxies relating to Portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Portfolios’ Web site at www.delawareinvestments.com; and (ii) on the Commission’s Web site at www.sec.gov.
|
| This report was prepared for investors in the Delaware Pooled® Trust Portfolios. It may be distributed to others only if preceded or accompanied by a current Delaware Pooled Trust prospectus, which contains details about charges, expenses, investment objectives, and operating policies of the Portfolios. All Delaware Pooled Trust Portfolios are offered by prospectus only. The return and principal value of an investment in a Portfolio will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. You should read the prospectus carefully before you invest. The figures in this report represent past results which are not a guarantee of future results. |
|  | 2005 Market Street |
| Philadelphia, PA 19103 |
| Telephone 800 231-8002 |
| Fax 215 255-1162 |
| (4517) | Printed in the USA |
| SA-DPT [4/09] DG3 6/09 | MF0905040 PO14031 |
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| Semiannual report |
| |
Delaware REIT Fund |
| |
April 30, 2009 |
Table of contents
| Disclosure of Fund expenses | | 1 |
| | | |
| Sector allocation and top 10 holdings | | 3 |
| | | |
| Statement of net assets | | 4 |
| | | |
| Statement of operations | | 8 |
| | | |
| Statements of changes in net assets | | 10 |
| | | |
| Financial highlights | | 12 |
| | | |
| Notes to financial statements | | 22 |
| | | |
| About the organization | | 32 |
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management
Business Trust, which is a registered investment advisor.
© 2009 Delaware Distributors, L.P.
All third-party trademarks cited are the property of their respective owners.
Disclosure of Fund expenses
For the period November 1, 2008 to April 30, 2009
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2008 to April 30, 2009.
Actual expenses
The first section of the table shown, “Actual Fund Return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% Return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware REIT Fund
Expense analysis of an investment of $1,000
| | Beginning | | Ending | | | | | Expenses |
| | Account Value | | Account Value | | Annualized | | Paid During Period |
| | 11/1/08 | | 4/30/09 | | Expense Ratio | | 11/1/08 to 4/30/09* |
| Actual Fund return | | | | | | | | | | | | | | | | |
| Class A | | $ | 1,000.00 | | | $ | 797.00 | | | 1.47 | % | | | $ | 6.55 | |
| Class B | | | 1,000.00 | | | | 794.50 | | | 2.22 | % | | | | 9.88 | |
| Class C | | | 1,000.00 | | | | 794.50 | | | 2.22 | % | | | | 9.88 | |
| Class R | | | 1,000.00 | | | | 796.00 | | | 1.72 | % | | | | 7.66 | |
| Institutional Class | | | 1,000.00 | | | | 798.40 | | | 1.22 | % | | | | 5.44 | |
| Hypothetical 5% return (5% return before expenses) | | | | | | | | | |
| Class A | | $ | 1,000.00 | | | $ | 1,017.50 | | | 1.47 | % | | | $ | 7.35 | |
| Class B | | | 1,000.00 | | | | 1,013.79 | | | 2.22 | % | | | | 11.08 | |
| Class C | | | 1,000.00 | | | | 1,013.79 | | | 2.22 | % | | | | 11.08 | |
| Class R | | | 1,000.00 | | | | 1,016.27 | | | 1.72 | % | | | | 8.60 | |
| Institutional Class | | | 1,000.00 | | | | 1,018.74 | | | 1.22 | % | | | | 6.11 | |
*“Expenses Paid During Period” are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
2
| Sector allocation and top 10 holdings | |
| Delaware REIT Fund | As of April 30, 2009 |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one Fund being different than another Fund’s sector designations.
| Sector | | Percentage of net assets |
| Common Stock | | 93.74 | % |
| Diversified REITs | | 6.17 | % |
| Health Care REITs | | 15.07 | % |
| Hotel REITs | | 3.32 | % |
| Industrial REITs | | 4.02 | % |
| Mall REITs | | 12.16 | % |
| Manufactured Housing REITs | | 2.04 | % |
| Multifamily REITs | | 12.46 | % |
| Office REITs | | 11.08 | % |
| Office/Industrial REITs | | 5.49 | % |
| Real Estate Operating Companies | | 0.59 | % |
| Self-Storage REITs | | 6.36 | % |
| Shopping Center REITs | | 11.83 | % |
| Specialty REITs | | 3.15 | % |
| Repurchase Agreement | | 4.69 | % |
| Securities Lending Collateral | | 14.08 | % |
| Total Value of Securities | | 112.51 | % |
| Obligation to Return Securities Lending Collateral | | (14.65 | %) |
| Receivables and Other Assets Net of Liabilities | | 2.14 | % |
| 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 Holdings | | | |
| Simon Property Group | | 8.91 | % |
| Public Storage | | 6.36 | % |
| Vornado Realty Trust | | 6.17 | % |
| Equity Residential | | 4.34 | % |
| Boston Properties | | 3.89 | % |
| HCP | | 3.73 | % |
| Federal Realty Investment Trust | | 3.41 | % |
| Ventas | | 3.18 | % |
| AvalonBay Communities | | 2.93 | % |
| Plum Creek Timber | | 2.89 | % |
3
| Statement of net assets | |
| Delaware REIT Fund | April 30, 2009 (Unaudited) |
| | Number of shares | | Value |
| Common Stock – 93.74% | | | | |
| Diversified REITs – 6.17% | | | | |
| * | Vornado Realty Trust | 209,274 | | $ | 10,231,406 |
| | | | | 10,231,406 |
| Health Care REITs – 15.07% | | | | |
| * | HCP | 282,100 | | | 6,192,095 |
| * | Health Care REIT | 126,800 | | | 4,320,076 |
| * | Nationwide Health Properties | 180,200 | | | 4,449,138 |
| | Omega Healthcare Investors | 126,700 | | | 1,991,724 |
| Senior Housing Properties Trust | 169,100 | | | 2,771,549 |
| * | Ventas | 184,100 | | | 5,272,624 |
| | | | | 24,997,206 |
| Hotel REITs – 3.32% | | | | |
| Hersha Hospitality Trust | 81,310 | | | 296,782 |
| Host Hotels & Resorts | 572,743 | | | 4,404,393 |
| * | LaSalle Hotel Properties | 67,800 | | | 810,888 |
| | | | | 5,512,063 |
| Industrial REITs – 4.02% | | | | |
| AMB Property | 67,535 | | | 1,289,243 |
| DCT Industrial Trust | 307,300 | | | 1,358,266 |
| EastGroup Properties | 9,700 | | | 326,017 |
| ProLogis | 406,057 | | | 3,699,179 |
| | | | | 6,672,705 |
| Mall REITs – 12.16% | | | | |
| * | Macerich | 261,600 | | | 4,585,853 |
| * | Simon Property Group | 286,489 | | | 14,782,833 |
| * | Taubman Centers | 33,800 | | | 805,116 |
| | | | | 20,173,802 |
| Manufactured Housing REITs – 2.04% | | | | |
| Equity Lifestyle Properties | 85,500 | | | 3,391,785 |
| | | | | 3,391,785 |
| Multifamily REITs – 12.46% | | | | |
| * | AvalonBay Communities | 85,634 | | | 4,864,868 |
| BRE Properties | 64,400 | | | 1,582,308 |
| Camden Property Trust | 101,400 | | | 2,750,982 |
| * | Equity Residential | 314,300 | | | 7,194,326 |
| * | Essex Property Trust | 24,887 | | | 1,580,076 |
| * | Mid-America Apartment Communities | 50,300 | | | 1,860,597 |
| UDR | 83,360 | | | 839,435 |
| | | | | 20,672,592 |
4
| Number of shares | | Value |
| Common Stock (continued) | | | | |
| Office REITs – 11.08% | | | | |
| * | Alexandria Real Estate Equities | 63,674 | | $ | 2,322,828 |
| | Boston Properties | 130,600 | | | 6,454,251 |
| * | Corporate Office Properties Trust | 56,310 | | | 1,720,834 |
| * | Highwoods Properties | 78,000 | | | 1,871,220 |
| Mack-Cali Realty | 157,400 | | | 4,227,764 |
| Parkway Properties | 59,500 | | | 825,265 |
| SL Green Realty | 54,653 | | | 965,172 |
| | | | | 18,387,334 |
| Office/Industrial REITs – 5.49% | | | | |
| * | Digital Realty Trust | 105,500 | | | 3,799,055 |
| Duke Realty | 223,700 | | | 2,185,549 |
| Liberty Property Trust | 128,000 | | | 3,115,520 |
| | | | | 9,100,124 |
| Real Estate Operating Companies – 0.59% | | | | |
| † | Corrections Corporation of America | 29,200 | | | 412,596 |
| Starwood Hotels & Resorts Worldwide | 26,800 | | | 559,048 |
| | | | | 971,644 |
| Self-Storage REITs – 6.36% | | | | |
| * | Public Storage | 157,900 | | | 10,557,194 |
| | | | | 10,557,194 |
| Shopping Center REITs – 11.83% | | | | |
| * | Federal Realty Investment Trust | 102,611 | | | 5,664,128 |
| * | Kimco Realty | 396,100 | | | 4,761,122 |
| Kite Realty Group Trust | 102,404 | | | 358,414 |
| Ramco-Gershenson Properties | 70,000 | | | 770,000 |
| * | Regency Centers | 112,561 | | | 4,215,409 |
| * | Tanger Factory Outlet Centers | 94,000 | | | 3,132,080 |
| Weingarten Realty Investors | 47,100 | | | 731,934 |
| | | | | 19,633,087 |
| Specialty REITs – 3.15% | | | | |
| * | Entertainment Properties Trust | 18,300 | | | 422,913 |
| * | Plum Creek Timber | 138,900 | | | 4,794,828 |
| | | | | 5,217,741 |
| Total Common Stock (cost $186,183,899) | | | | 155,518,683 |
5
Statement of net assets
Delaware REIT Fund
| Principal amount | | | Value | |
| Repurchase Agreement** – 4.69% | | | | | | |
| BNP Paribas 0.15%, dated 4/30/09, to be repurchased | | | | | | |
| on 5/1/09, repurchase price $7,790,032 | | | | | | |
| (collateralized by U.S. Government obligations, | | | | | | |
| 6/24/09-9/24/09; with market value $7,953,571) | $ | 7,790,000 | | $ | 7,790,000 | |
| Total Repurchase Agreement (cost $7,790,000) | | | | | 7,790,000 | |
| |
| Total Value of Securities Before Securities | | | | | | |
| Lending Collateral – 98.43% (cost $193,973,899) | | | | | 163,308,683 | |
| |
| Number of shares | | | | |
| Securities Lending Collateral*** – 13.71% | | | | | | |
| Investment Companies | | | | | | |
| Mellon GSL DBT II Collateral Fund | | 12,941,292 | | | 12,941,292 | |
| BNY Mellon SL DBT II Liquidating Fund | | 10,147,442 | | | 9,808,192 | |
| †Mellon GSL Reinvestment Trust II | | 611,030 | | | 61 | |
| Total Securities Lending Collateral (cost $23,699,764) | | | | | 22,749,545 | |
| |
| Total Value of Securities – 112.14% | | | | | | |
| (cost $217,673,663) | | | | | 186,058,228 | © |
| Obligation to Return Securities | | | | | | |
| Lending Collateral*** – (14.28%) | | | | | (23,699,764 | ) |
| Receivables and Other Assets | | | | | | |
| Net of Liabilities – 2.14% | | | | | 3,550,722 | |
| Net Assets Applicable to 25,932,605 | | | | | | |
| Shares Outstanding – 100.00% | | | | $ | 165,909,186 | |
| |
| Net Asset Value – Delaware REIT Fund | | | | | | |
| Class A ($53,173,507 / 8,316,768 Shares) | | | | | | $6.39 | |
| Net Asset Value – Delaware REIT Fund | | | | | | |
| Class B ($11,290,757 / 1,767,663 Shares) | | | | | | $6.39 | |
| Net Asset Value – Delaware REIT Fund | | | | | | |
| Class C ($14,797,654 / 2,315,949 Shares) | | | | | | $6.39 | |
| Net Asset Value – Delaware REIT Fund | | | | | | |
| Class R ($3,086,667 / 482,784 Shares) | | | | | | $6.39 | |
| Net Asset Value – Delaware REIT Fund | | | | | | |
| Institutional Class ($83,560,601 / 13,049,441 Shares) | | | | | | $6.40 | |
6
| | | | | |
| Components of Net Assets at April 30, 2009: | | | | |
| Shares of beneficial interest (unlimited authorization – no par) | | $ | 312,429,466 | |
| Undistributed net investment income | | | 5,088,188 | |
| Accumulated net realized loss on investments | | | (119,993,033 | ) |
| Net unrealized depreciation of investments | | | (31,615,435 | ) |
| Total net assets | | $ | 165,909,186 | |
| † | Non income producing security. |
| * | Fully or partially on loan. |
| ** | See Note 1 in “Notes to financial statements.” |
| *** | See Note 8 in “Notes to financial statements.” |
| © | Includes $22,877,652 of securities loaned. |
REIT – Real Estate Investment Trust
| Net Asset Value and Offering Price Per Share – | | | |
| Delaware REIT Fund | | | |
| Net asset value Class A (A) | | $ | 6.39 |
| Sales charge (5.75% of offering price) (B) | | | 0.39 |
| Offering price | | $ | 6.78 |
| (A) | | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. |
| (B) | | See the current prospectus for purchase of $50,000 or more. |
See accompanying notes
7
| Statement of operations | |
| Delaware REIT Fund | Six Months Ended April 30, 2009 (Unaudited) |
| Investment Income: | | | | | | | |
| Dividends | | $ | 9,682,335 | | | | |
| Interest | | | 7,701 | | | | |
| Securities lending income | | | 101,666 | | $ | 9,791,702 | |
| |
| Expenses: | | | | | | | |
| Management fees | | | 560,135 | | | | |
| Dividend disbursing and transfer agent fees and expenses | | | 527,526 | | | | |
| Distribution expense – Class A | | | 76,853 | | | | |
| Distribution expense – Class B | | | 59,419 | | | | |
| Distribution expense – Class C | | | 76,369 | | | | |
| Distribution expense – Class R | | | 8,106 | | | | |
| Registration fees | | | 63,477 | | | | |
| Reports and statements to shareholders | | | 36,428 | | | | |
| Accounting and administration expenses | | | 29,874 | | | | |
| Audit and tax | | | 13,645 | | | | |
| Legal fees | | | 11,667 | | | | |
| Trustees’ fees | | | 5,654 | | | | |
| Custodian fees | | | 3,583 | | | | |
| Insurance fees | | | 2,328 | | | | |
| Pricing fees | | | 1,358 | | | | |
| Consulting fees | | | 1,319 | | | | |
| Taxes (other than taxes on income) | | | 402 | | | | |
| Trustees’ expenses | | | 389 | | | | |
| Dues and services | | | 214 | | | 1,478,746 | |
| Less fees waived | | | | | | (344,968 | ) |
| Less waived distribution expenses – Class A | | | | | | (12,809 | ) |
| Less waived distribution expenses – Class R | | | | | | (1,351 | ) |
| Total operating expenses | | | | | | 1,119,618 | |
| Net Investment Income | | | | | | 8,672,084 | |
| |
| Net Realized and Unrealized Gain (Loss) on Investments: | | | | | | | |
| Net realized loss on investments | | | | | | (90,696,008 | ) |
| Net change in unrealized appreciation/depreciation of investments | | | 42,036,653 | |
| Net Realized and Unrealized Loss on Investments | | | | | | (48,659,355 | ) |
| |
| Net Decrease in Net Assets Resulting from Operations | | | | | $ | (39,987,271 | ) |
See accompanying notes
8
Statements of changes in net assets
Delaware REIT Fund
| | Six Months | | Year |
| | Ended | | Ended |
| | 4/30/09 | | 10/31/08 |
| | (Unaudited) | | | | |
| Increase (Decrease) in Net Assets from Operations: | | | | | | | | |
| Net investment income | | $ | 8,672,084 | | | $ | 5,423,741 | |
| Net realized loss on investments | | | (90,696,008 | ) | | | (26,844,463 | ) |
| Net change in unrealized appreciation/depreciation | | | | | | | | |
| of investments | | | 42,036,653 | | | | (117,125,176 | ) |
| Net decrease in net assets resulting from operations | | | (39,987,271 | ) | | | (138,545,898 | ) |
| |
| Dividends and Distributions to Shareholders from: | | | | | | | | |
| Net investment income: | | | | | | | | |
| Class A | | | (1,259,613 | ) | | | (3,017,144 | ) |
| Class B | | | (237,131 | ) | | | (628,609 | ) |
| Class C | | | (306,834 | ) | | | (739,771 | ) |
| Class R | | | (64,786 | ) | | | (111,667 | ) |
| Institutional Class | | | (1,715,532 | ) | | | (3,589,389 | ) |
| |
| Net realized gain on investments: | | | | | | | | |
| Class A | | | — | | | | (29,255,383 | ) |
| Class B | | | — | | | | (8,911,390 | ) |
| Class C | | | — | | | | (9,679,097 | ) |
| Class R | | | — | | | | (1,021,236 | ) |
| Institutional Class | | | — | | | | (23,707,395 | ) |
| The Real Estate Investment Trust Portfolio Class* | | | — | | | | (15 | ) |
| | | (3,583,896 | ) | | | (80,661,096 | ) |
| |
| Capital Share Transactions: | | | | | | | | |
| Proceeds from shares sold: | | | | | | | | |
| Class A | | | 7,331,108 | | | | 20,295,575 | |
| Class B | | | 95,243 | | | | 464,084 | |
| Class C | | | 659,705 | | | | 2,489,643 | |
| Class R | | | 1,224,380 | | | | 3,016,816 | |
| Institutional Class | | | 29,887,695 | | | | 102,891,711 | |
10
| | Six Months | | Year |
| | Ended | | Ended |
| | 4/30/09 | | 10/31/08 |
| | (Unaudited) | | | | |
| Capital Share Transactions (continued): | | | | | | | | |
| Net asset value of shares issued upon reinvestment | | | | | | | | |
| of dividends and distributions: | | | | | | | | |
| Class A | | $ | 1,150,001 | | | $ | 30,007,521 | |
| Class B | | | 205,996 | | | | 8,465,189 | |
| Class C | | | 278,081 | | | | 9,786,133 | |
| Class R | | | 64,648 | | | | 1,129,135 | |
| Institutional Class | | | 1,652,391 | | | | 24,562,159 | |
| The Real Estate Investment Trust Portfolio Class* | | | — | | | | 11 | |
| | | 42,549,248 | | | | 203,107,977 | |
| |
| Cost of shares repurchased: | | | | | | | | |
| Class A | | | (12,424,642 | ) | | | (48,230,245 | ) |
| Class B | | | (2,700,338 | ) | | | (15,954,108 | ) |
| Class C | | | (3,623,610 | ) | | | (13,597,018 | ) |
| Class R | | | (903,201 | ) | | | (3,159,932 | ) |
| Institutional Class | | | (18,213,044 | ) | | | (67,241,814 | ) |
| The Real Estate Investment Trust Portfolio Class* | | | — | | | | (27,045,813 | ) |
| | | (37,864,835 | ) | | | (175,228,930 | ) |
| Increase in net assets derived from capital | | | | | | | | |
| share transactions | | | 4,684,413 | | | | 27,879,047 | |
| Net Decrease in Net Assets | | | (38,886,754 | ) | | | (191,327,947 | ) |
| |
| Net Assets: | | | | | | | | |
| Beginning of period | | | 204,795,940 | | | | 396,123,887 | |
| End of period (including undistributed | | | | | | | | |
| net investment income of $5,088,188 and | | | | | | | | |
| $—, respectively) | | $ | 165,909,186 | | | $ | 204,795,940 | |
*Effective at the close of business on February 21, 2008, all assets of the Fund’s Real Estate Investment Trust Portfolio Class were redeemed.
See accompanying notes
11
Financial highlights
Delaware REIT Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income2 |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return3 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to fees waived and expense paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to fees waived and expense paid indirectly |
| Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects waivers by the manager and distributor, as applicable. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
12
| Six Months Ended | | Year Ended |
| 4/30/091 | | 10/31/08 | | | 10/31/07 | | | 10/31/06 | | | 10/31/05 | | | 10/31/04 | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $8.200 | | | $17.690 | | | $24.180 | | | $21.390 | | | $21.140 | | | $17.400 | |
| | | |
| | | |
| | 0.350 | | | 0.225 | | | 0.149 | | | 0.351 | | | 0.441 | | | 0.445 | |
| | (2.010 | ) | | (5.793 | ) | | 0.372 | | | 5.910 | | | 2.101 | | | 4.333 | |
| | (1.660 | ) | | (5.568 | ) | | 0.521 | | | 6.261 | | | 2.542 | | | 4.778 | |
| | | |
| | | |
| | (0.150 | ) | | (0.339 | ) | | (0.380 | ) | | (0.460 | ) | | (0.435 | ) | | (0.544 | ) |
| | — | | | (3.583 | ) | | (6.631 | ) | | (3.011 | ) | | (1.857 | ) | | (0.494 | ) |
| | (0.150 | ) | | (3.922 | ) | | (7.011 | ) | | (3.471 | ) | | (2.292 | ) | | (1.038 | ) |
| | | |
| | $6.390 | | | $8.200 | | | $17.690 | | | $24.180 | | | $21.390 | | | $21.140 | |
| | | |
| | (20.30% | ) | | (37.85% | ) | | 2.33% | | | 33.45% | | | 12.27% | | | 28.43% | |
| | | |
| | | |
| | $53,173 | | | $73,445 | | | $153,051 | | | $231,367 | | | $285,579 | | | $308,100 | |
| | 1.47% | | | 1.48% | | | 1.36% | | | 1.34% | | | 1.34% | | | 1.40% | |
| | | |
| | 1.98% | | | 1.59% | | | 1.41% | | | 1.39% | | | 1.39% | | | 1.58% | |
| | 11.63% | | | 1.82% | | | 0.79% | | | 1.65% | | | 2.07% | | | 2.35% | |
| | | |
| | 11.12% | | | 1.71% | | | 0.74% | | | 1.60% | | | 2.02% | | | 2.17% | |
| | 113% | | | 115% | | | 82% | | | 60% | | | 37% | | | 43% | |
13
Financial highlights
Delaware REIT Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income2 |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return3 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to fees waived and expense paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to fees waived and expense paid indirectly |
| Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
14
| Six Months Ended | | Year Ended |
| 4/30/091 | | 10/31/08 | | | 10/31/07 | | | 10/31/06 | | | 10/31/05 | | | 10/31/04 | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $8.190 | | | $17.680 | | | $24.150 | | | $21.360 | | | $21.120 | | | $17.380 | |
| | | |
| | | |
| | 0.328 | | | 0.138 | | | 0.006 | | | 0.191 | | | 0.281 | | | 0.302 | |
| | (2.003 | ) | | (5.793 | ) | | 0.373 | | | 5.911 | | | 2.089 | | | 4.338 | |
| | (1.675 | ) | | (5.655 | ) | | 0.379 | | | 6.102 | | | 2.370 | | | 4.640 | |
| | | |
| | | |
| | (0.125 | ) | | (0.252 | ) | | (0.218 | ) | | (0.301 | ) | | (0.273 | ) | | (0.406 | ) |
| | — | | | (3.583 | ) | | (6.631 | ) | | (3.011 | ) | | (1.857 | ) | | (0.494 | ) |
| | (0.125 | ) | | (3.835 | ) | | (6.849 | ) | | (3.312 | ) | | (2.130 | ) | | (0.900 | ) |
| | | |
| | $6.390 | | | $8.190 | | | $17.680 | | | $24.150 | | | $21.360 | | | $21.120 | |
| | | |
| | (20.55% | ) | | (38.28% | ) | | 1.52% | | | 32.50% | | | 11.39% | | | 27.54% | |
| | | |
| | | |
| | $11,291 | | | $17,831 | | | $48,300 | | | $71,206 | | | $72,917 | | | $85,009 | |
| | 2.22% | | | 2.23% | | | 2.11% | | | 2.09% | | | 2.09% | | | 2.15% | |
| | | |
| | 2.68% | | | 2.29% | | | 2.11% | | | 2.09% | | | 2.09% | | | 2.28% | |
| | 10.88% | | | 1.07% | | | 0.04% | | | 0.90% | | | 1.32% | | | 1.60% | |
| | | |
| | 10.42% | | | 1.01% | | | 0.04% | | | 0.90% | | | 1.32% | | | 1.47% | |
| | 113% | | | 115% | | | 82% | | | 60% | | | 37% | | | 43% | |
15
Financial highlights
Delaware REIT Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income2 |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return3 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to fees waived and expense paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to fees waived and expense paid indirectly |
| Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
16
| Six Months Ended | | Year Ended |
| 4/30/091 | | 10/31/08 | | | 10/31/07 | | | 10/31/06 | | | 10/31/05 | | | 10/31/04 | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $8.190 | | | $17.680 | | | $24.150 | | | $21.370 | | | $21.120 | | | $17.380 | |
| | | |
| | | |
| | 0.328 | | | 0.136 | | | 0.006 | | | 0.191 | | | 0.281 | | | 0.302 | |
| | (2.003 | ) | | (5.791 | ) | | 0.373 | | | 5.901 | | | 2.099 | | | 4.338 | |
| | (1.675 | ) | | (5.655 | ) | | 0.379 | | | 6.092 | | | 2.380 | | | 4.640 | |
| | | |
| | | |
| | (0.125 | ) | | (0.252 | ) | | (0.218 | ) | | (0.301 | ) | | (0.273 | ) | | (0.406 | ) |
| | — | | | (3.583 | ) | | (6.631 | ) | | (3.011 | ) | | (1.857 | ) | | (0.494 | ) |
| | (0.125 | ) | | (3.835 | ) | | (6.849 | ) | | (3.312 | ) | | (2.130 | ) | | (0.900 | ) |
| | | |
| | $6.390 | | | $8.190 | | | $17.680 | | | $24.150 | | | $21.370 | | | $21.120 | |
| | | |
| | (20.55% | ) | | (38.33% | ) | | 1.58% | | | 32.43% | | | 11.44% | | | 27.54% | |
| | | |
| | | |
| | $14,798 | | | $22,695 | | | $50,819 | | | $71,614 | | | $70,860 | | | $73,040 | |
| | 2.22% | | | 2.23% | | | 2.11% | | | 2.09% | | | 2.09% | | | 2.15% | |
| | | |
| | 2.68% | | | 2.29% | | | 2.11% | | | 2.09% | | | 2.09% | | | 2.28% | |
| | 10.88% | | | 1.07% | | | 0.04% | | | 0.90% | | | 1.32% | | | 1.60% | |
| | | | |
| | 10.42% | | | 1.01% | | | 0.04% | | | 0.90% | | | 1.32% | | | 1.47% | |
| | 113% | | | 115% | | | 82% | | | 60% | | | 37% | | | 43% | |
17
Financial highlights
Delaware REIT Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income2 |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return3 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to fees waived and expense paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to fees waived and expense paid indirectly |
| Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes
18
| Six Months Ended | | Year Ended |
| 4/30/091 | | 10/31/08 | | | 10/31/07 | | | 10/31/06 | | | 10/31/05 | | | 10/31/04 | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $8.200 | | | $17.690 | | | $24.180 | | | $21.390 | | | $21.130 | | | $17.400 | |
| | | |
| | | |
| | 0.343 | | | 0.191 | | | 0.102 | | | 0.297 | | | 0.373 | | | 0.377 | |
| | (2.010 | ) | | (5.789 | ) | | 0.363 | | | 5.913 | | | 2.097 | | | 4.341 | |
| | (1.667 | ) | | (5.598 | ) | | 0.465 | | | 6.210 | | | 2.470 | | | 4.718 | |
| | | |
| | | |
| | (0.143 | ) | | (0.309 | ) | | (0.324 | ) | | (0.409 | ) | | (0.353 | ) | | (0.494 | ) |
| | — | | | (3.583 | ) | | (6.631 | ) | | (3.011 | ) | | (1.857 | ) | | (0.494 | ) |
| | (0.143 | ) | | (3.892 | ) | | (6.955 | ) | | (3.420 | ) | | (2.210 | ) | | (0.988 | ) |
| | | |
| | $6.390 | | | $8.200 | | | $17.690 | | | $24.180 | | | $21.390 | | | $21.130 | |
| | | |
| | (20.40% | ) | | (38.00% | ) | | 2.03% | | | 33.13% | | | 11.90% | | | 28.04% | |
| | | |
| | | |
| | $3,087 | | | $3,395 | | | $5,734 | | | $7,107 | | | $4,168 | | | $2,035 | |
| | 1.72% | | | 1.73% | | | 1.61% | | | 1.59% | | | 1.66% | | | 1.75% | |
| | | |
| | 2.28% | | | 1.89% | | | 1.71% | | | 1.69% | | | 1.69% | | | 1.88% | |
| | 11.38% | | | 1.57% | | | 0.54% | | | 1.40% | | | 1.75% | | | 2.00% | |
| | | |
| | 10.82% | | | 1.41% | | | 0.44% | | | 1.30% | | | 1.72% | | | 1.87% | |
| | 113% | | | 115% | | | 82% | | | 60% | | | 37% | | | 43% | |
19
Financial highlights
Delaware REIT Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
| Net asset value, beginning of period |
| |
| Income (loss) from investment operations: |
| Net investment income2 |
| Net realized and unrealized gain (loss) on investments |
| Total from investment operations |
| |
| Less dividends and distributions from: |
| Net investment income |
| Net realized gain on investments |
| Total dividends and distributions |
| |
| Net asset value, end of period |
| |
| Total return3 |
| |
| Ratios and supplemental data: |
| Net assets, end of period (000 omitted) |
| Ratio of expenses to average net assets |
| Ratio of expenses to average net assets |
| prior to fees waived and expense paid indirectly |
| Ratio of net investment income to average net assets |
| Ratio of net investment income to average net assets |
| prior to fees waived and expense paid indirectly |
| Portfolio turnover |
1 Ratios and portfolio turnover have been annualized and total return has not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return reflects a waiver by the manager, as applicable. Performance would have been lower had the waiver not been in effect. |
See accompanying notes
20
| Six Months Ended | | Year Ended |
| 4/30/091 | | 10/31/08 | | | 10/31/07 | | | 10/31/06 | | | 10/31/05 | | | 10/31/04 | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | $8.220 | | | $17.710 | | | $24.210 | | | $21.410 | | | $21.150 | | | $17.410 | |
| | | |
| | | |
| | 0.358 | | | 0.247 | | | 0.196 | | | 0.404 | | | 0.494 | | | 0.492 | |
| | (2.020 | ) | | (5.784 | ) | | 0.366 | | | 5.923 | | | 2.101 | | | 4.341 | |
| | (1.662 | ) | | (5.537 | ) | | 0.562 | | | 6.327 | | | 2.595 | | | 4.833 | |
| | | |
| | | |
| | (0.158 | ) | | (0.370 | ) | | (0.431 | ) | | (0.516 | ) | | (0.478 | ) | | (0.599 | ) |
| | — | | | (3.583 | ) | | (6.631 | ) | | (3.011 | ) | | (1.857 | ) | | (0.494 | ) |
| | (0.158 | ) | | (3.953 | ) | | (7.062 | ) | | (3.527 | ) | | (2.335 | ) | | (1.093 | ) |
| | | |
| | $6.400 | | | $8.220 | | | $17.710 | | | $24.210 | | | $21.410 | | | $21.150 | |
| | | |
| | (20.16% | ) | | (37.66% | ) | | 2.56% | | | 33.81% | | | 12.54% | | | 28.78% | |
| | | |
| | | |
| | $83,560 | | | $87,430 | | | $106,145 | | | $32,166 | | | $58,428 | | | $53,261 | |
| | 1.22% | | | 1.23% | | | 1.11% | | | 1.09% | | | 1.09% | | | 1.15% | |
| | | | |
| | 1.68% | | | 1.29% | | | 1.11% | | | 1.09% | | | 1.09% | | | 1.28% | |
| | 11.88% | | | 2.07% | | | 1.04% | | | 1.90% | | | 2.32% | | | 2.60% | |
| | | | |
| | 11.42% | | | 2.01% | | | 1.04% | | | 1.90% | | | 2.32% | | | 2.47% | |
| | 113% | | | 115% | | | 82% | | | 60% | | | 37% | | | 43% | |
21
Notes to financial statements | |
Delaware REIT Fund | April 30, 2009 (Unaudited) |
The Real Estate Investment Trust Portfolio (Delaware REIT Fund or Fund) is a series of Delaware Pooled Trust (Trust), which is organized as a Delaware statutory trust. The Trust is an open-end investment company. The Fund is considered non-diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class B, Class C, Class R and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of up to 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first 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. This report contains information relating only to the Delaware REIT Fund. All other Delaware Pooled Trust portfolios are included in a separate report.
The investment objective of the Fund is to seek maximum long-term total return, with capital appreciation as a secondary objective. It seeks to achieve its objectives by investing primarily in securities of companies principally engaged in the real estate industry.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used. Investment companies are valued at net asset value per share. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair value will be used, various factors will be taken into consideration, such as market closures, or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities at 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
22
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. The Fund did not record any tax benefit or expense in the current period.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may invest in a pooled cash account along with other members of the Delaware Investments® Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. The aggregate daily balance of the pooled cash account is invested in repurchase agreements secured by obligations of the U.S. government. The respective collateral is held by the Fund’s custodian bank until the maturity of the respective repurchase agreements. Each repurchase agreement is at least 102% collateralized. However, in the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral may be subject to legal proceedings.
Use of Estimates — The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of 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.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The financial statements reflect an estimate of the reclassification of the distribution character. The Fund declares and pays dividends from net investment income quarterly and distributions from net realized gains on investments, if any, annually.
23
Notes to financial statements
Delaware REIT Fund
1. Significant Accounting Policies (continued)
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. There were no commission rebates for the six months ended April 30, 2009. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the period ended April 30, 2009.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion and 0.60% on average daily net assets in excess of $2.5 billion.
Effective March 1, 2009, DMC has voluntarily agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses, (excluding any 12b-1 plan expenses, taxes, interest, inverse floater program expenses, brokerage fees, certain insurance costs, and non-routine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively, non-routine expenses)) do not exceed 1.21% of average daily net assets of the Fund until such time as the waivers are discontinued. For purposes of these waivers and reimbursements, non-routine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Fund’s Board and DMC. These expense waivers and reimbursements apply only to expenses paid directly by the Fund. For the period March 1, 2008 to February 28, 2009, annual operating expenses were contractually limited to 1.23% of average daily net assets of the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the six months ended April 30, 2009, the Fund was charged $3,734 for these services.
24
DSC also provides dividend disbursing and transfer agency services. The Fund pays DSC a monthly fee based on the number of shareholder accounts for dividend disbursing and transfer agent services.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee not to exceed 0.30% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class B and C shares and 0.60% of the average daily net assets of the Class R shares. DDLP has contracted to waive distribution and service fees through February 28, 2010, in order to prevent distribution and service fees of Class A and Class R shares from exceeding 0.25% and 0.50%, respectively, of average daily net assets. Institutional Class shares pay no distribution and service expenses.
At April 30, 2009, the Fund had liabilities payable to affiliates as follows:
| Investment management fee payable to DMC | $ | 41,360 |
| Dividend disbursing, transfer agent and fund accounting | | |
| oversight fees and other expenses payable to DSC | | 84,130 |
| Distribution fees payable to DDLP | | 31,405 |
| Other expenses payable to DMC and affiliates* | | 3,523 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Such expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, registration fees and trustees’ fees.
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates’ employees. For the six months ended April 30, 2009, the Fund was charged $ 7,798 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2009, DDLP earned $3,029 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2009, DDLP received gross CDSC commissions of $—, $6,200 and $626 on redemption of the Fund’s Class A, Class B and Class C shares, respectively, and these commissions were entirely used to offset up-front commissions previously paid by DDLP to broker-dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
3. Investments
For the six months ended April 30, 2009, the Fund made purchases of $91,442,069 and sales of $83,040,325 of investment securities other than short-term investments.
At April 30, 2009, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At April 30, 2009, the cost of investments was $288,052,476. At April 30, 2009, net unrealized depreciation was $101,994,248, of which $1,803,177 related to unrealized appreciation of investments and $103,797,425 related to unrealized depreciation of investments.
25
Notes to financial statements
Delaware REIT Fund
3. Investments (continued)
Effective November 1, 2008, the Fund adopted Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 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. FAS 157 also establishes a framework for measuring fair value and a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.
Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity
The following table summarizes the valuation of the Fund’s investments by the FAS 157 fair value hierarchy levels as of April 30, 2009:
| Securities |
| Level 1 | $ | 163,308,683 |
| Level 2 | | 22,749,484 |
| Level 3 | | 61 |
| Total | $ | 186,058,228 |
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:
| Securities |
| Balance as of 10/31/08 | $ | 32,996 | |
| Net change in unrealized appreciation/depreciation | | (32,935 | ) |
| Balance as of 4/30/09 | $ | 61 | |
| |
| Net change in unrealized appreciation/depreciation from | | | |
| investments still held as of 4/30/09 | $ | (32,935 | ) |
26
4. Dividends and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the six months ended April 30, 2009 and the year ended October 31, 2008 was as follows:
| Six Months | | Year |
| Ended | | Ended |
| 4/30/09* | | 10/31/08 |
| Ordinary income | $ | 3,583,896 | | $ | 19,443,932 |
| Long-term capital gain | | — | | | 61,155,357 |
| Return of capital | | — | | | 61,807 |
| Total | $ | 3,583,896 | | $ | 80,661,096 |
*Tax information for the period ended April 30, 2009 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
5. Components of Net Assets on a Tax Basis
The components of net assets are estimated since final tax characteristics cannot be determined until fiscal year end. As of April 30, 2009, the estimated components of net assets on a tax basis were as follows:
| Shares of beneficial interest | $ | 312,429,466 | |
| Undistributed ordinary income | | 5,088,188 | |
| Realized losses 11/1/08 – 4/30/09 | | (40,440,354 | ) |
| Capital loss carryforwards as of 10/31/08 | | (9,173,866 | ) |
| Unrealized depreciation of investments | | (101,994,248 | ) |
| Net assets | $ | 165,909,186 | |
The undistributed earnings for the Delaware REIT Fund are estimated pending final notification of the tax character of distributions received from investments in Real Estate Investment Trusts.
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales.
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at October 31, 2008 will expire as follows: $9,173,866 expires in 2016.
For the six months ended April 30, 2009, the Fund had capital losses of $40,440,354, which may increase the capital loss carryforwards.
27
Notes to financial statements
Delaware REIT Fund
6. Capital Shares
Transactions in capital shares were as follows:
| Six Months | | Year |
| Ended | | Ended |
| 4/30/09 | | 10/31/08 |
| Shares sold: | | | | | |
| Class A | 1,203,523 | | | 1,755,042 | |
| Class B | 15,798 | | | 43,175 | |
| Class C | 110,881 | | | 208,988 | |
| Class R | 212,120 | | | 261,470 | |
| Institutional Class | 5,115,781 | | | 8,457,890 | |
| The Real Estate Investment Trust Portfolio Class* | — | | | — | |
| |
| Shares issued upon reinvestment of dividends and distributions: | | | | | |
| Class A | 210,330 | | | 2,543,376 | |
| Class B | 37,781 | | | 717,840 | |
| Class C | 51,021 | | | 829,270 | |
| Class R | 11,906 | | | 95,724 | |
| Institutional Class | 305,567 | | | 2,079,763 | |
| The Real Estate Investment Trust Portfolio Class* | — | | | 1 | |
| | 7,274,708 | | | 16,992,539 | |
| Shares repurchased: | | | | | |
| Class A | (2,049,086 | ) | | (3,997,829 | ) |
| Class B | (462,440 | ) | | (1,317,005 | ) |
| Class C | (615,457 | ) | | (1,142,927 | ) |
| Class R | (155,000 | ) | | (267,544 | ) |
| Institutional Class | (3,010,981 | ) | | (5,890,961 | ) |
| The Real Estate Investment Trust Portfolio Class* | — | | | (1,811,509 | ) |
| (6,292,964 | ) | | (14,427,775 | ) |
| Net increase | 981,744 | | | 2,564,764 | |
*Effective at the close of business on February 21, 2008, all assets of the Fund’s Real Estate Investment Trust Portfolio Class were redeemed.
For the six months ended April 30, 2009 and the year ended October 31, 2008, 68,949 Class B shares were converted to 68,791 Class A shares valued at $413,191 and 147,129 Class B shares were converted to 146,775 Class A shares valued at $1,838,671, respectively. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the statements of changes in net assets.
28
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $225,000,000 revolving line of credit with The Bank of New York Mellon (BNY Mellon) to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. The agreement expired on November 18, 2008.
Effective November 18, 2008, the Fund, along with the other Participants, entered into an amendment to the agreement with BNY Mellon for a $35,000,000 revolving line of credit. The agreement, as amended, is to be used as described above and operates in substantially the same manner as the original agreement. The agreement, as amended, expires on November 17, 2009. The Fund had no amounts outstanding as of April 30, 2009 or at any time during the period then ended.
8. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. With respect to each loan, if the aggregate market value of securities collateral held plus cash collateral received on any business day 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 not less than the applicable collateral requirements. Cash collateral received is generally invested in the Mellon GSL DBT II Collateral Fund (the Collective Trust) established by BNY Mellon for the purpose of investment on behalf of clients participating in its securities lending programs. The Collective Trust may invest in fixed income securities, with a weighted average maturity not to exceed 90 days, rated in one of the top three tiers by Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc. or repurchase agreements collateralized by such securities. The Collective Trust seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. At April 30, 2009, the Collective Trust held only cash and assets with a maturity of one business day or less (Cash/Overnight Assets). The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. Effective April 20, 2009, BNY Mellon transferred the assets of the Collective Trust other than the Cash/Overnight Assets to the BNY Mellon SL DBT II Liquidating Fund (the Liquidating Fund), effectively bifurcating the collateral investment pool. The Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold.
29
Notes to financial statements
Delaware REIT Fund
8. Securities Lending (continued)
In October 2008, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund, or at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and are subject to change in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
At April 30, 2009, the value of securities on loan was $22,877,652, for which cash collateral was received and invested in accordance with the Lending Agreement. Such investments are presented on the statement of net assets under the caption “Securities Lending Collateral.”
9. Credit and Market Risk
The Fund concentrates its investments in the real estate industry 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. The Fund is also affected by interest rate changes, particularly if the real estate investment trusts it holds use floating rate debt to finance their ongoing operations. Its investments may also tend to fluctuate more in value than a portfolio that invests in a broader range of industries.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid assets. 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 April 30, 2009, there were no Rule 144A securities and no securities have been determined to be illiquid under the Fund’s Liquidity Procedures.
30
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.
31
About the organization
This semiannual report is for the information of Delaware REIT Fund shareholders, but it may be used with prospective investors when preceded or accompanied by a current prospectus for Delaware REIT Fund and the Delaware Investments® Fund profile for the most recently completed calendar quarter. These documents are available at www.delawareinvestments.com. The prospectus sets forth details about charges, expenses, investment objectives, and operating policies of the investment company. You should read the prospectus carefully before you invest. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the investment company will fluctuate so that shares, when redeemed, may be worth more or less than their original cost.
| Board of trustees | |
| |
| Patrick P. Coyne | Ann R. Leven |
| Chairman, President, and | Consultant |
| Chief Executive Officer | ARL Associates |
| Delaware Investments Family of Funds | New York, NY |
| Philadelphia, PA | |
| Thomas F. Madison |
| Thomas L. Bennett | President and Chief Executive Officer |
| Private Investor | MLM Partners, Inc. |
| Rosemont, PA | Minneapolis, MN |
| |
| John A. Fry | Janet L. Yeomans |
| President | Vice President and Treasurer |
| Franklin & Marshall College | 3M Corporation |
| Lancaster, PA | St. Paul, MN |
| |
| Anthony D. Knerr | J. Richard Zecher |
| Founder and Managing Director | Founder |
| Anthony Knerr & Associates | Investor Analytics |
| New York, NY | Scottsdale, AZ |
| |
| Lucinda S. Landreth | |
| Former Chief Investment Officer | |
| Assurant, Inc. | |
| Philadelphia, PA |
32
| Affiliated officers | Contact information |
| |
| David F. Connor | Investment manager |
| Vice President, Deputy General Counsel, and | Delaware Management Company, a series of |
| Secretary | Delaware Management Business Trust |
| Delaware Investments® Family of Funds | Philadelphia, PA |
| Philadelphia, PA | |
| National distributor |
| Daniel V. Geatens | Delaware Distributors, L.P. |
| Vice President and Treasurer | Philadelphia, PA |
| Delaware Investments Family of Funds | |
| Philadelphia, PA | Shareholder servicing, dividend disbursing, |
| and transfer agent |
| David P. O’Connor | Delaware Service Company, Inc. |
| Senior Vice President, General Counsel, | 2005 Market Street |
| and Chief Legal Officer | Philadelphia, PA 19103-7094 |
| Delaware Investments Family of Funds | |
| Philadelphia, PA | For shareholders |
| 800 523-1918 |
| Richard Salus | |
| Senior Vice President and | For securities dealers and financial |
| Chief Financial Officer | institutions representatives only |
| Delaware Investments Family of Funds | 800 362-7500 |
| Philadelphia, PA | |
| Web site |
| www.delawareinvestments.com |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the Commission’s Web site at www.sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Fund’s Schedule of Investments are available without charge on the Fund’s Web site at www.delawareinvestments.com. The Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund’s Web site at www.delawareinvestments.com; and (ii) on the Commission’s Web site at www.sec.gov.
33
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
| (a) | (1) Code of Ethics |
| |
| Not applicable. |
| |
| | (2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT. |
| | |
| | (3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934. |
| | |
| Not applicable. |
| |
| (b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: DELAWARE POOLED® TRUST
| PATRICK P. COYNE |
| By: | Patrick P. Coyne |
| Title: | Chief Executive Officer |
| Date: | July 2, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| PATRICK P. COYNE |
| By: | Patrick P. Coyne |
| Title: | Chief Executive Officer |
| Date: | July 2, 2009 |
| |
| |
| RICHARD SALUS |
| By: | Richard Salus |
| Title: | Chief Financial Officer |
| Date: | July 2, 2009 |
