UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: | 811-07972 | |
Exact name of registrant as specified in charter: | Delaware Group® Adviser Funds | |
Address of principal executive offices: | 2005 Market Street | |
Philadelphia, PA 19103 | ||
Name and address of agent for service: | David F. Connor, Esq. | |
2005 Market Street | ||
Philadelphia, PA 19103 | ||
Registrant’s telephone number, including area code: | (800) 523-1918 | |
Date of fiscal year end: | October 31 | |
Date of reporting period: | April 30, 2013 |
Item 1. Reports to Stockholders
Semiannual report Delaware Diversified Income Fund April 30, 2013 Fixed income mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Diversified Income Fund at delawareinvestments.com.
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Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
Investments in Delaware Diversified Income Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Security type/sector allocation | 3 |
Statement of net assets | 5 |
Statement of assets and liabilities | 59 |
Statement of operations | 60 |
Statements of changes in net assets | 62 |
Financial highlights | 64 |
Notes to financial statements | 74 |
About the organization | 93 |
Unless otherwise noted, views expressed herein are current as of April 30, 2013, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from November 1, 2012 to April 30, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2012 to April 30, 2013.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Diversified Income Fund
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||||||
11/1/12 | 4/30/13 | Expense Ratio | 11/1/12 to 4/30/13* | ||||||||||||
Actual Fund return† | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,021.60 | 0.90% | $ | 4.51 | ||||||||
Class B | 1,000.00 | 1,017.80 | 1.65% | 8.26 | |||||||||||
Class C | 1,000.00 | 1,017.80 | 1.65% | 8.26 | |||||||||||
Class R | 1,000.00 | 1,020.30 | 1.15% | 5.76 | |||||||||||
Institutional Class | 1,000.00 | 1,022.90 | 0.65% | 3.26 | |||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,020.33 | 0.90% | $ | 4.51 | ||||||||
Class B | 1,000.00 | 1,016.61 | 1.65% | 8.25 | |||||||||||
Class C | 1,000.00 | 1,016.61 | 1.65% | 8.25 | |||||||||||
Class R | 1,000.00 | 1,019.09 | 1.15% | 5.76 | |||||||||||
Institutional Class | 1,000.00 | 1,021.57 | 0.65% | 3.26 |
*“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).
†Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.
2
Security type/sector allocation | ||
Delaware Diversified Income Fund | As of April 30, 2013 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may also represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Security type/sector | Percentage of net assets | |||
Agency Asset-Backed Securities | 0.01 | % | ||
Agency Collateralized Mortgage Obligations | 1.66 | % | ||
Agency Mortgage-Backed Securities | 15.25 | % | ||
Commercial Mortgage-Backed Securities | 4.29 | % | ||
Convertible Bonds | 3.21 | % | ||
Corporate Bonds | 51.00 | % | ||
Automotive | 0.59 | % | ||
Banking | 6.24 | % | ||
Basic Industry | 4.16 | % | ||
Brokerage | 0.56 | % | ||
Capital Goods | 1.06 | % | ||
Communications | 7.18 | % | ||
Consumer Cyclical | 3.25 | % | ||
Consumer Non-Cyclical | 4.41 | % | ||
Electric | 3.76 | % | ||
Energy | 5.27 | % | ||
Finance Companies | 1.98 | % | ||
Healthcare | 0.95 | % | ||
Insurance | 2.37 | % | ||
Natural Gas | 2.93 | % | ||
Real Estate | 1.87 | % | ||
Services | 1.33 | % | ||
Technology | 1.90 | % | ||
Transportation | 0.88 | % | ||
Utilities | 0.31 | % | ||
Municipal Bond | 0.00 | % | ||
Non-Agency Asset-Backed Securities | 1.50 | % | ||
Non-Agency Collateralized Mortgage Obligations | 0.37 | % | ||
Regional Bonds | 1.69 | % | ||
Senior Secured Loans | 7.15 | % | ||
Sovereign Bonds | 8.33 | % | ||
Supranational Banks | 0.51 | % |
3
Security type/sector allocation
Delaware Diversified Income Fund
Security type/sector | Percentage of net assets | |||
U.S. Treasury Obligations | 3.06 | % | ||
Common Stock | 0.00 | % | ||
Convertible Preferred Stock | 0.81 | % | ||
Preferred Stock | 0.66 | % | ||
Short-Term Investments | 11.54 | % | ||
Securities Lending Collateral | 1.93 | % | ||
Total Value of Securities | 112.97 | % | ||
Obligation to Return Securities Lending Collateral | (1.99 | %) | ||
Other Liabilities Net of Receivables and Other Assets | (10.98 | %) | ||
Total Net Assets | 100.00 | % |
4
Statement of net assets | ||
Delaware Diversified Income Fund | April 30, 2013 (Unaudited) |
Principal amount° | Value (U.S. $) | ||||||
Agency Asset-Backed Securities – 0.01% | |||||||
Fannie Mae Grantor Trust | |||||||
Series 2003-T4 2A5 5.407% 9/26/33 | USD | 905,347 | $ | 972,099 | |||
Fannie Mae Whole Loan | |||||||
Series 2001-W2 6.473% 10/25/31 | 1,903 | 1,988 | |||||
•Series 2002-W11 AV1 0.54% 11/25/32 | 13,324 | 12,337 | |||||
Total Agency Asset-Backed Securities | |||||||
(cost $882,939) | 986,424 | ||||||
Agency Collateralized Mortgage Obligations – 1.66% | |||||||
Fannie Mae Grantor Trust | |||||||
•Series 1999-T2 A1 7.50% 1/19/39 | 19,571 | 22,072 | |||||
Series 2002-T4 A3 7.50% 12/25/41 | 196,545 | 227,272 | |||||
Series 2002-T19 A1 6.50% 7/25/42 | 138,527 | 167,639 | |||||
Series 2004-T1 1A2 6.50% 1/25/44 | 66,523 | 79,734 | |||||
Fannie Mae Interest Strip | |||||||
Series 265 2 9.00% 3/1/24 | 9,428 | 11,075 | |||||
Fannie Mae REMICS | |||||||
Series 1990-92 C 7.00% 8/25/20 | 1,142 | 1,282 | |||||
Series 1996-46 ZA 7.50% 11/25/26 | 214,747 | 250,465 | |||||
Series 2001-50 BA 7.00% 10/25/41 | 102,200 | 120,372 | |||||
Series 2002-83 GH 5.00% 12/25/17 | 259,956 | 277,531 | |||||
Series 2002-90 A2 6.50% 11/25/42 | 279,267 | 324,724 | |||||
Series 2003-26 AT 5.00% 11/25/32 | 7,269,737 | 7,594,621 | |||||
Series 2003-38 MP 5.50% 5/25/23 | 3,664,452 | 4,061,155 | |||||
Series 2003-106 WE 4.50% 11/25/22 | 5,436,363 | 5,594,659 | |||||
Series 2003-122 AJ 4.50% 2/25/28 | 52,429 | 52,632 | |||||
Series 2005-110 MB 5.50% 9/25/35 | 1,773,753 | 1,948,288 | |||||
Series 2009-94 AC 5.00% 11/25/39 | 5,995,610 | 6,763,564 | |||||
Series 2010-41 PN 4.50% 4/25/40 | 7,623,413 | 8,663,910 | |||||
Series 2010-75 NA 4.00% 9/25/28 | 809,845 | 834,640 | |||||
Series 2010-96 DC 4.00% 9/25/25 | 14,795,000 | 16,109,551 | |||||
û•Series 2012-122 SD 5.90% 11/25/42 | 11,529,684 | 3,196,038 | |||||
û•Series 2012-124 SD 5.95% 11/25/42 | 17,632,248 | 4,958,736 | |||||
ûSeries 2013-26 ID 3.00% 4/25/33 | 15,450,520 | 2,263,642 | |||||
ûSeries 2013-31 MI 3.00% 4/25/33 | 4,901,375 | 708,762 | |||||
ûSeries 2013-38 AI 3.00% 4/25/33 | 15,898,252 | 2,215,498 | |||||
ûSeries 2013-44 DI 3.00% 5/25/33 | 45,579,333 | 6,580,516 |
5
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Agency Collateralized Mortgage Obligations (continued) | |||||||
Fannie Mae Whole Loan | |||||||
•Series 2002-W1 2A 6.861% 2/25/42 | USD | 19,907 | $ | 23,325 | |||
•Series 2002-W6 2A 7.037% 6/25/42 | 39,479 | 47,751 | |||||
•Series 2003-W1 2A 6.862% 12/25/42 | 19,886 | 23,916 | |||||
Series 2003-W10 1A4 4.505% 6/25/43 | 30,752 | 34,026 | |||||
Series 2003-W15 2A7 5.55% 8/25/43 | 14,400 | 16,008 | |||||
Series 2004-W11 1A2 6.50% 5/25/44 | 409,412 | 481,203 | |||||
Freddie Mac REMICS | |||||||
Series 1730 Z 7.00% 5/15/24 | 255,494 | 294,332 | |||||
Series 2326 ZQ 6.50% 6/15/31 | 678,075 | 778,247 | |||||
Series 2557 WE 5.00% 1/15/18 | 3,131,261 | 3,344,640 | |||||
Series 2598 QD 5.50% 4/15/32 | 189,791 | 192,963 | |||||
Series 2621 QH 5.00% 5/15/33 | 35,000 | 38,751 | |||||
Series 2622 PE 4.50% 5/15/18 | 4,780,017 | 5,062,569 | |||||
Series 2624 QH 5.00% 6/15/33 | 40,000 | 44,118 | |||||
Series 2687 PG 5.50% 3/15/32 | 277,153 | 279,732 | |||||
Series 2717 MH 4.50% 12/15/18 | 82,085 | 87,220 | |||||
Series 2762 LG 5.00% 9/15/32 | 3,340,688 | 3,410,548 | |||||
Series 2809 DC 4.50% 6/15/19 | 1,691,615 | 1,792,347 | |||||
Series 3123 HT 5.00% 3/15/26 | 50,000 | 55,886 | |||||
Series 3131 MC 5.50% 4/15/33 | 717,947 | 725,929 | |||||
Series 3150 EQ 5.00% 5/15/26 | 45,000 | 51,094 | |||||
Series 3171 MG 6.00% 8/15/34 | 1,724,541 | 1,761,694 | |||||
Series 3173 PE 6.00% 4/15/35 | 592,024 | 612,840 | |||||
Series 3416 GK 4.00% 7/15/22 | 126,212 | 129,659 | |||||
Series 3656 PM 5.00% 4/15/40 | 11,118,918 | 12,430,372 | |||||
Series 4065 DE 3.00% 6/15/32 | 1,626,000 | 1,764,236 | |||||
û•Series 4148 SA 5.901% 12/15/42 | 19,022,059 | 5,288,907 | |||||
ûSeries 4185 LI 3.00% 3/15/33 | 11,384,285 | 1,635,350 | |||||
ûSeries 4191 CI 3.00% 4/15/33 | 4,665,000 | 664,763 | |||||
• | Freddie Mac Strip Series 19 F 1.06% 6/1/28 | 6,213 | 5,919 | ||||
t | Freddie Mac Structured Pass Through Securities | ||||||
Series T-42 A5 7.50% 2/25/42 | 113,230 | 135,889 | |||||
Series T-54 2A 6.50% 2/25/43 | 30,803 | 37,253 | |||||
Series T-58 2A 6.50% 9/25/43 | 689,495 | 806,462 | |||||
•Series T-60 1A4C 4.959% 3/25/44 | 6,946 | 7,041 | |||||
GNMA Series 2010-113 KE 4.50% 9/20/40 | 20,392,264 | 23,495,865 | |||||
NCUA Guaranteed Notes | |||||||
Series 2010-C1 A2 2.90% 10/29/20 | 9,280,000 | 9,916,701 |
6
Principal amount° | Value (U.S. $) | ||||||
Agency Collateralized Mortgage Obligations (continued) | |||||||
• | Vendee Mortgage Trust | ||||||
Series 2000-1 1A 6.558% 1/15/30 | USD | 7,916 | $ | 9,493 | |||
Total Agency Collateralized Mortgage | |||||||
Obligations (cost $142,877,784) | 148,515,427 | ||||||
Agency Mortgage-Backed Securities – 15.25% | |||||||
Fannie Mae | |||||||
4.50% 5/1/41 | 5,971,445 | 6,259,229 | |||||
6.50% 8/1/17 | 106,189 | 117,524 | |||||
7.00% 11/15/16 | 28,371 | 28,826 | |||||
• | Fannie Mae ARM | ||||||
2.022% 11/1/24 | 2,894 | 3,060 | |||||
2.034% 7/1/33 | 84,804 | 89,068 | |||||
2.234% 1/1/36 | 103,725 | 109,554 | |||||
2.291% 12/1/33 | 4,448 | 4,680 | |||||
2.397% 6/1/34 | 108,200 | 114,655 | |||||
2.402% 10/1/33 | 86,752 | 90,137 | |||||
2.461% 3/1/38 | 12,822 | 13,643 | |||||
2.639% 8/1/34 | 8,320 | 8,891 | |||||
2.657% 4/1/36 | 495,334 | 528,920 | |||||
2.691% 6/1/37 | 10,397 | 11,153 | |||||
2.715% 11/1/32 | 558 | 595 | |||||
2.777% 6/1/34 | 2,009 | 2,122 | |||||
2.791% 11/1/35 | 138,125 | 147,758 | |||||
2.802% 4/1/36 | 313,238 | 333,020 | |||||
2.81% 11/1/35 | 675,853 | 723,348 | |||||
2.832% 4/1/37 | 1,342,109 | 1,437,340 | |||||
3.044% 4/1/36 | 1,321 | 1,416 | |||||
4.898% 5/1/36 | 294,089 | 318,032 | |||||
4.984% 9/1/38 | 547,338 | 590,059 | |||||
5.024% 11/1/33 | 453,172 | 485,875 | |||||
5.179% 8/1/35 | 88,066 | 95,117 | |||||
5.844% 8/1/37 | 639,488 | 691,399 | |||||
6.025% 6/1/36 | 164,283 | 177,557 | |||||
6.127% 7/1/36 | 91,789 | 99,236 | |||||
6.244% 8/1/36 | 48,549 | 51,331 | |||||
6.444% 7/1/36 | 2,852 | 3,014 | |||||
Fannie Mae Relocation 15 yr | |||||||
4.00% 9/1/20 | 295,680 | 310,100 |
7
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Agency Mortgage-Backed Securities (continued) | |||||||
Fannie Mae Relocation 30 yr | |||||||
4.00% 3/1/35 | USD | 6,851 | $ | 7,250 | |||
5.00% 9/1/33 | 217,630 | 233,470 | |||||
5.00% 11/1/33 | 112,909 | 121,127 | |||||
5.00% 1/1/34 | 14,467 | 15,521 | |||||
5.00% 11/1/34 | 60,002 | 64,370 | |||||
5.00% 4/1/35 | 184,126 | 197,527 | |||||
5.00% 10/1/35 | 129,193 | 138,596 | |||||
5.00% 1/1/36 | 262,480 | 281,584 | |||||
Fannie Mae S.F. 10 yr 6.00% 9/1/17 | 8,636 | 9,106 | |||||
Fannie Mae S.F. 15 yr | |||||||
2.50% 2/1/28 | 12,757,100 | 13,367,846 | |||||
2.50% 5/1/28 | 2,339,728 | 2,453,205 | |||||
3.00% 2/1/27 | 97,359 | 102,977 | |||||
3.00% 3/1/27 | 7,546,254 | 8,012,315 | |||||
3.00% 8/1/27 | 1,745,095 | 1,845,784 | |||||
3.00% 11/1/27 | 6,994,540 | 7,410,912 | |||||
3.00% 4/1/28 | 34,866 | 36,877 | |||||
3.50% 7/1/26 | 6,267,678 | 6,734,212 | |||||
3.50% 10/1/26 | 35,673,147 | 37,916,002 | |||||
4.00% 11/1/25 | 18,308,036 | 19,864,599 | |||||
5.00% 9/1/20 | 5,948 | 6,442 | |||||
5.00% 5/1/21 | 597,067 | 642,506 | |||||
5.50% 11/1/18 | 13,450 | 14,386 | |||||
5.50% 5/1/19 | 101,415 | 108,468 | |||||
5.50% 4/1/23 | 141,047 | 153,679 | |||||
5.50% 6/1/23 | 94,586 | 103,056 | |||||
6.00% 12/1/16 | 21,103 | 22,340 | |||||
6.00% 9/1/21 | 3,760,199 | 4,129,213 | |||||
6.00% 8/1/22 | 57,803 | 63,475 | |||||
Fannie Mae S.F. 15 yr TBA | |||||||
2.50% 5/1/28 | 187,916,000 | 196,489,668 | |||||
2.50% 6/1/28 | 2,435,000 | 2,541,151 | |||||
3.00% 5/1/28 | 175,174,000 | 185,000,175 | |||||
3.00% 6/1/28 | 2,940,000 | 3,100,782 | |||||
Fannie Mae S.F. 20 yr | |||||||
5.00% 11/1/23 | 527,206 | 579,088 | |||||
5.50% 12/1/24 | 113,159 | 124,203 | |||||
5.50% 3/1/27 | 198,412 | 216,784 |
8
Principal amount° | Value (U.S. $) | ||||||
Agency Mortgage-Backed Securities (continued) | |||||||
Fannie Mae S.F. 20 yr (continued) | |||||||
5.50% 3/1/28 | USD | 218,726 | $ | 238,297 | |||
5.50% 8/1/28 | 3,614,867 | 3,936,039 | |||||
5.50% 12/1/29 | 944,384 | 1,028,291 | |||||
Fannie Mae S.F. 30 yr | |||||||
3.50% 9/1/42 | 186,438 | 199,066 | |||||
3.50% 1/1/43 | 678,998 | 724,141 | |||||
4.00% 11/1/40 | 2,511,185 | 2,688,709 | |||||
4.00% 1/1/41 | 12,027,811 | 12,878,098 | |||||
4.00% 2/1/41 | 15,550,349 | 16,649,656 | |||||
4.00% 3/1/41 | 11,401,863 | 12,213,243 | |||||
4.00% 9/1/41 | 1,730,963 | 1,854,142 | |||||
4.00% 10/1/41 | 8,342,440 | 8,932,196 | |||||
4.00% 12/1/41 | 20,376,824 | 21,817,331 | |||||
4.00% 3/1/42 | 24,712,209 | 26,667,734 | |||||
4.00% 1/1/43 | 41,194,266 | 44,123,140 | |||||
4.50% 7/1/36 | 1,848,674 | 1,994,383 | |||||
4.50% 4/1/40 | 2,646,602 | 2,857,684 | |||||
4.50% 8/1/40 | 11,404,533 | 12,295,180 | |||||
4.50% 11/1/40 | 6,306,717 | 6,809,715 | |||||
4.50% 12/1/40 | 2,229,873 | 2,407,718 | |||||
4.50% 2/1/41 | 2,955,740 | 3,193,325 | |||||
4.50% 3/1/41 | 12,565,994 | 13,576,059 | |||||
4.50% 5/1/41 | 5,507,891 | 5,955,414 | |||||
4.50% 8/1/41 | 13,181,490 | 14,241,030 | |||||
4.50% 10/1/41 | 7,308,734 | 7,896,217 | |||||
4.50% 11/1/41 | 6,157,879 | 6,652,855 | |||||
5.00% 2/1/35 | 1,891,241 | 2,060,807 | |||||
5.00% 6/1/35 | 3,430 | 3,728 | |||||
5.50% 3/1/34 | 170,920 | 188,029 | |||||
5.50% 12/1/35 | 96,129 | 105,874 | |||||
5.50% 11/1/36 | 42,740 | 46,751 | |||||
5.50% 8/1/37 | 381,853 | 420,075 | |||||
6.00% 10/1/33 | 1,721 | 1,933 | |||||
6.00% 6/1/35 | 6,281 | 6,921 | |||||
6.00% 1/1/38 | 267,863 | 293,469 | |||||
6.50% 2/1/36 | 2,372,727 | 2,678,146 | |||||
6.50% 3/1/36 | 1,839,590 | 2,076,383 | |||||
6.50% 11/1/36 | 338,630 | 382,181 |
9
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Agency Mortgage-Backed Securities (continued) | |||||||
Fannie Mae S.F. 30 yr (continued) | |||||||
6.50% 9/1/37 | USD | 1,744,575 | $ | 1,959,469 | |||
7.00% 8/1/32 | 81,644 | 97,524 | |||||
7.00% 9/1/32 | 70,329 | 84,009 | |||||
7.00% 2/1/36 | 20,368 | 24,243 | |||||
7.00% 4/1/37 | 17,196 | 19,674 | |||||
7.00% 12/1/37 | 15,933 | 18,986 | |||||
7.50% 1/1/31 | 1,695 | 2,074 | |||||
7.50% 3/1/32 | 27,773 | 34,057 | |||||
7.50% 4/1/32 | 32,364 | 38,954 | |||||
7.50% 6/1/34 | 46,386 | 55,856 | |||||
7.50% 10/1/34 | 22,249 | 27,194 | |||||
Fannie Mae S.F. 30 yr TBA | |||||||
3.00% 5/1/43 | 101,851,000 | 106,529,780 | |||||
3.00% 6/1/43 | 103,194,000 | 107,644,241 | |||||
3.50% 5/1/43 | 36,821,000 | 39,231,627 | |||||
3.50% 6/1/43 | 175,321,000 | 186,360,753 | |||||
4.50% 5/1/43 | 43,975,000 | 47,410,547 | |||||
4.50% 7/1/43 | 18,387,000 | 19,777,517 | |||||
Freddie Mac | |||||||
4.50% 1/1/41 | 12,057,599 | 12,648,821 | |||||
7.00% 2/25/14 | 179 | 180 | |||||
• | Freddie Mac ARM | ||||||
2.342% 12/1/33 | 322,997 | 344,174 | |||||
2.358% 4/1/33 | 2,347 | 2,380 | |||||
2.723% 12/1/33 | 58,461 | 62,233 | |||||
2.763% 7/1/36 | 425,933 | 456,965 | |||||
2.765% 8/1/37 | 10,782 | 11,548 | |||||
2.785% 2/1/37 | 804,733 | 864,684 | |||||
2.802% 3/1/36 | 97,102 | 104,180 | |||||
2.834% 5/1/35 | 263,461 | 278,380 | |||||
2.865% 4/1/34 | 27,052 | 28,907 | |||||
5.78% 10/1/36 | 88,994 | 95,624 | |||||
5.907% 10/1/37 | 167,974 | 183,134 | |||||
6.171% 10/1/37 | 5,449 | 5,915 | |||||
Freddie Mac Relocation 15 yr | |||||||
3.50% 10/1/18 | 66,717 | 69,469 | |||||
Freddie Mac Relocation 30 yr | |||||||
5.00% 9/1/33 | 330,952 | 352,806 | |||||
6.50% 10/1/30 | 722 | 777 |
10
Principal amount° | Value (U.S. $) | ||||||
Agency Mortgage-Backed Securities (continued) | |||||||
Freddie Mac S.F. 15 yr | |||||||
3.00% 12/1/26 | USD | 196,365 | $ | 209,418 | |||
4.50% 5/1/20 | 1,338,237 | 1,426,909 | |||||
5.00% 6/1/18 | 500,535 | 533,264 | |||||
5.00% 4/1/20 | 645,093 | 686,325 | |||||
5.50% 7/1/14 | 457 | 490 | |||||
Freddie Mac S.F. 30 yr | |||||||
3.00% 11/1/42 | 5,772,693 | 6,041,766 | |||||
4.00% 10/1/40 | 6,978,479 | 7,454,160 | |||||
4.00% 11/1/40 | 4,564,895 | 4,876,057 | |||||
4.00% 12/1/40 | 2,751,935 | 2,939,518 | |||||
4.00% 2/1/42 | 2,857,884 | 3,052,689 | |||||
4.50% 10/1/39 | 8,712,177 | 9,329,942 | |||||
4.50% 11/1/39 | 15,069,073 | 16,137,594 | |||||
4.50% 3/1/42 | 13,205,724 | 14,150,372 | |||||
5.50% 11/1/35 | 83,611 | 90,805 | |||||
6.00% 2/1/36 | 3,833,657 | 4,183,366 | |||||
6.00% 8/1/38 | 7,473,623 | 8,220,533 | |||||
6.00% 10/1/38 | 10,888,962 | 11,991,151 | |||||
6.50% 10/1/32 | 2,225 | 2,571 | |||||
6.50% 8/1/38 | 604,326 | 674,537 | |||||
7.00% 11/1/33 | 265,829 | 313,581 | |||||
GNMA I S.F. 30 yr | |||||||
7.00% 5/15/28 | 142,104 | 173,888 | |||||
7.00% 12/15/34 | 2,931,740 | 3,457,316 | |||||
7.50% 10/15/30 | 1,555 | 1,798 | |||||
7.50% 2/15/32 | 480 | 588 | |||||
9.50% 9/15/17 | 2,552 | 2,843 | |||||
10.00% 7/15/17 | 2,624 | 2,637 | |||||
Total Agency Mortgage-Backed Securities | |||||||
(cost $1,359,426,460) | 1,365,830,115 | ||||||
Commercial Mortgage-Backed Securities – 4.29% | |||||||
BAML Commercial Mortgage Securities | |||||||
•Series 2005-6 A4 5.359% 9/10/47 | 10,190,000 | 11,179,877 | |||||
•Series 2006-2 A4 5.919% 5/10/45 | 7,622,000 | 8,608,752 | |||||
Series 2006-4 A4 5.634% 7/10/46 | 16,485,000 | 18,540,795 |
11
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Commercial Mortgage-Backed Securities (continued) | |||||||
• | Bear Stearns Commercial Mortgage Securities | ||||||
Series 2005-PW10 A4 5.405% 12/11/40 | USD | 7,786,000 | $ | 8,571,055 | |||
Series 2005-T20 A4A 5.298% 10/12/42 | 3,000,000 | 3,282,069 | |||||
Series 2006-PW12 A4 5.91% 9/11/38 | 7,235,000 | 8,159,054 | |||||
Citigroup Commercial Mortgage Trust | |||||||
Series 2012-GC8 A4 3.024% 9/10/45 | 15,750,000 | 16,347,650 | |||||
t | Commercial Mortgage Pass | ||||||
Through Certificates | |||||||
•Series 2005-C6 A5A 5.116% 6/10/44 | 5,790,000 | 6,289,445 | |||||
Series 2013-CR7 A4 3.213% 3/10/46 | 5,040,000 | 5,290,735 | |||||
• | Credit Suisse Mortgage Capital Certificates | ||||||
Series 2006-C1 AAB 5.581% 2/15/39 | 320,822 | 332,517 | |||||
# | DBUBS Mortgage Trust Series 2011-LC1A A3 | ||||||
144A 5.002% 11/10/46 | 19,239,000 | 22,976,580 | |||||
#• | FREMF Mortgage Trust | ||||||
Series 2012-K21 B 144A 4.072% 7/25/45 | 7,041,000 | 7,441,147 | |||||
• | GE Capital Commercial Mortgage | ||||||
Series 2005-C4 A4 5.471% 11/10/45 | 108,000 | 118,789 | |||||
Goldman Sachs Mortgage Securities II | |||||||
*•Series 2004-GG2 A6 5.396% 8/10/38 | 10,047,000 | 10,420,879 | |||||
Series 2005-GG4 A4A 4.751% 7/10/39 | 28,499,000 | 30,272,664 | |||||
•Series 2006-GG6 A4 5.553% 4/10/38 | 8,405,000 | 9,330,147 | |||||
#Series 2010-C1 A2 144A 4.592% 8/10/43 | 9,975,000 | 11,602,092 | |||||
•#Series 2010-C1 C 144A 5.635% 8/10/43 | 4,640,000 | 5,422,244 | |||||
#Series 2012-ALOHA 144A 4.049% 4/10/34 | 8,900,000 | 9,614,928 | |||||
• | Greenwich Capital Commercial Funding | ||||||
Series 2005-GG5 A5 5.224% 4/10/37 | 28,665,000 | 31,282,629 | |||||
JPMorgan Chase Commercial Mortgage | |||||||
Securities Trust | |||||||
Series 2005-CB11 A4 5.335% 8/12/37 | 2,280,000 | 2,443,873 | |||||
•Series 2005-LDP3 A4A 4.936% 8/15/42 | 8,280,000 | 8,948,287 | |||||
•Series 2005-LDP5 A4 5.368% 12/15/44 | 10,685,000 | 11,714,649 | |||||
Series 2011-C5 A3 4.171% 8/15/46 | 17,000,000 | 19,234,378 | |||||
Lehman Brothers-UBS Commercial | |||||||
Mortgage Trust | |||||||
Series 2004-C1 A4 4.568% 1/15/31 | 4,426,095 | 4,527,068 | |||||
•Series 2005-C3 4.895% 7/15/40 | 2,980,000 | 3,119,658 | |||||
Merrill Lynch Mortgage Trust | |||||||
Series 2005-CIP1 A2 4.96% 7/12/38 | 91,521 | 92,841 | |||||
•Series 2005-CKI1 A6 5.448% 11/12/37 | 1,973,524 | 2,146,049 |
12
Principal amount° | Value (U.S. $) | ||||||
Commercial Mortgage-Backed Securities (continued) | |||||||
Morgan Stanley Bank of America | |||||||
Merrill Lynch Trust | |||||||
Series 2013-C8 AS 3.376% 12/15/48 | USD | 7,450,000 | $ | 7,735,268 | |||
Morgan Stanley Capital I | |||||||
Series 2005-HQ6 A4A 4.989% 8/13/42 | 4,695,000 | 5,057,745 | |||||
•Series 2005-HQ6 AJ 5.073% 8/13/42 | 2,200,000 | 2,306,539 | |||||
•Series 2007-T27 A4 5.816% 6/11/42 | 22,587,500 | 26,463,108 | |||||
# | OBP Depositor Trust | ||||||
Series 2010-OBP A 144A 4.646% 7/15/45 | 5,545,000 | 6,467,799 | |||||
# | Timberstar Trust 144A | ||||||
Series 2006-1A A 5.668% 10/15/36 | 9,295,000 | 10,616,935 | |||||
Series 2006-1A C 5.884% 10/15/36 | 4,500,000 | 4,897,503 | |||||
# | VNO Mortgage Trust | ||||||
Series 2012-6AVE 144A 2.996% 11/15/30 | 25,355,000 | 26,078,277 | |||||
WF-RBS Commercial Mortgage Trust | |||||||
Series 2012-C9 A3 2.87% 11/15/45 | 6,440,000 | 6,602,719 | |||||
Series 2012-C9 B 3.84% 11/15/45 | 2,120,000 | 2,237,499 | |||||
Series 2013-C11 A5 3.071% 3/15/45 | 5,740,000 | 5,958,183 | |||||
Series 2013-C13 AS 3.345% 5/15/45 | 2,700,000 | 2,808,000 | |||||
Total Commercial Mortgage-Backed Securities | |||||||
(cost $363,603,767) | 384,540,426 | ||||||
Convertible Bonds – 3.21% | |||||||
* | Advanced Micro Devices 6.00% exercise | ||||||
price $28.08, expiration date 4/30/15 | 6,196,000 | 6,288,940 | |||||
# | Alaska Communications System Group 144A | ||||||
6.25% exercise price $10.28, | |||||||
expiration date 4/27/18 | 5,531,000 | 4,075,656 | |||||
* | Alcatel-Lucent USA 2.875% exercise | ||||||
price $15.35, expiration date 6/13/25 | 5,263,000 | 5,272,868 | |||||
Alere 3.00% exercise price $43.98, | |||||||
expiration date 5/15/16 | 6,522,000 | 6,497,543 | |||||
Ares Capital 5.75% exercise price $19.13, | |||||||
expiration date 2/1/16 | 5,873,000 | 6,434,606 | |||||
Φ* | ArvinMeritor 4.00% exercise price $26.73, | ||||||
expiration date 2/12/27 | 11,091,000 | 9,870,989 | |||||
BGC Partners 4.50% exercise price | |||||||
$9.84, expiration date 7/13/16 | 5,427,000 | 5,630,513 |
13
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Convertible Bonds (continued) | |||||||
# | Blucora 144A 4.25% exercise price | ||||||
$21.66, expiration date 3/29/19 | USD | 3,621,000 | $ | 3,740,946 | |||
Chesapeake Energy | |||||||
2.25% exercise price $85.61, | |||||||
expiration date 12/14/38 | 1,000,000 | 890,000 | |||||
*2.50% exercise price $51.14, | |||||||
expiration date 5/15/37 | 2,396,000 | 2,325,618 | |||||
# | Ciena 144A 3.75% exercise price | ||||||
$20.17, expiration date 10/15/18 | 6,695,000 | 7,469,109 | |||||
# | Clearwire Communications 144A 8.25% exercise | ||||||
price $7.08, expiration date 11/30/40 | 4,482,000 | 4,846,163 | |||||
# | Corporate Office Properties 144A 4.25% exercise | ||||||
price $47.96, expiration date 4/12/30 | 1,353,000 | 1,429,952 | |||||
Dendreon 2.875% exercise price | |||||||
$51.24, expiration date 1/13/16 | 6,892,000 | 5,487,755 | |||||
Φ | General Cable 4.50% exercise price | ||||||
$36.75, expiration date 11/15/29 | 7,717,000 | 9,419,563 | |||||
Gilead Sciences 1.625% exercise price | |||||||
$22.71, expiration date 5/1/16 | 2,514,000 | 5,648,656 | |||||
* | Helix Energy Solutions Group 3.25% exercise | ||||||
price $25.02, expiration date 3/12/32 | 7,223,000 | 8,938,463 | |||||
*Φ | Hologic 2.00% exercise price | ||||||
$31.17, expiration date 2/27/42 | 7,142,000 | 7,298,231 | |||||
Iconix Brand Group 2.50% exercise price | |||||||
$30.75, expiration date 5/31/16 | 5,148,000 | 5,965,245 | |||||
# | Illumina 144A 0.25% exercise price | ||||||
$83.55, expiration date 3/11/16 | 3,389,000 | 3,528,796 | |||||
Intel 3.25% exercise price $22.20, | |||||||
expiration date 8/1/39 | 7,064,000 | 9,072,860 | |||||
International Game Technology 3.25% exercise | |||||||
price $19.93, expiration date 5/1/14 | 2,901,000 | 3,147,585 | |||||
Jefferies Group 3.875% exercise price | |||||||
$45.82, expiration date 10/31/29 | 6,983,000 | 7,314,693 | |||||
L-3 Communications Holdings 3.00% exercise | |||||||
price $91.21, expiration date 8/1/35 | 4,301,000 | 4,392,396 | |||||
Leap Wireless International 4.50% exercise | |||||||
price $93.21, expiration date 7/10/14 | 6,837,000 | 7,007,925 | |||||
# | Lexington Realty Trust 144A 6.00% exercise | ||||||
price $6.93, expiration date 1/11/30 | 3,034,000 | 5,679,269 |
14
Principal amount° | Value (U.S. $) | ||||||
Convertible Bonds (continued) | |||||||
# | Liberty Interactive 144A 0.75% exercise price | ||||||
$1,000.00, expiration date 3/30/43 | USD | 1,945,000 | $ | 2,024,531 | |||
Linear Technology 3.00% exercise price | |||||||
$42.07 expiration date 4/30/27 | 7,575,000 | 8,015,297 | |||||
Live Nation Entertainment 2.875% exercise | |||||||
price $27.14, expiration date 7/14/27 | 7,369,000 | 7,442,690 | |||||
MGM Resorts International 4.25% exercise | |||||||
price $18.58, expiration date 4/10/15 | 8,803,000 | 9,765,827 | |||||
Mirant (Escrow) 2.50% exercise price | |||||||
$67.95, expiration date 6/15/21 | 695,000 | 0 | |||||
# | Molina Healthcare 144A 1.125% exercise | ||||||
price $40.77, expiration date 1/13/20 | 1,046,000 | 1,112,683 | |||||
Mylan 3.75% exercise price | |||||||
$13.32, expiration date 9/15/15 | 2,067,000 | 4,619,745 | |||||
Nuance Communications 2.75% exercise | |||||||
price $32.30, expiration date 11/1/31 | 10,063,000 | 10,559,860 | |||||
NuVasive 2.75% exercise price | |||||||
$42.13, expiration date 6/30/17 | 13,699,000 | 13,288,029 | |||||
# | Opko Health 144A 3.00% exercise price | ||||||
$7.07, expiration date 1/28/33 | 1,690,000 | 1,687,888 | |||||
# | Owens-Brockway Glass Container 144A 3.00% | ||||||
exercise price $47.47, expiration date 5/28/15 | 7,517,000 | 7,648,548 | |||||
* | Peabody Energy 4.75% exercise price | ||||||
$57.95, expiration date 12/15/41 | 4,051,000 | 3,291,438 | |||||
PHH 4.00% exercise price | |||||||
$25.80, expiration date 8/27/14 | 10,459,000 | 11,498,362 | |||||
* | Rovi 2.625% exercise price | ||||||
$47.36, expiration date 2/10/40 | 3,407,000 | 3,490,046 | |||||
#* | Ryman Hospitality Properties 144A 3.75% exercise | ||||||
price $22.23, expiration date 9/29/14 | 3,534,000 | 7,101,131 | |||||
* | SanDisk 1.50% exercise price | ||||||
$52.37, expiration date 8/11/17 | 7,449,000 | 9,404,363 | |||||
SBA Communications 4.00% exercise price | |||||||
$30.38, expiration date 9/29/14 | 1,905,000 | 4,994,672 | |||||
Steel Dynamics 5.125% exercise price | |||||||
$17.25, expiration date 6/15/14 | 2,262,000 | 2,512,234 | |||||
TIBCO Software 2.25% exercise price | |||||||
$50.57, expiration date 4/30/32 | 11,777,000 | 11,541,459 | |||||
# | Titan Machinery 144A 3.75% exercise price | ||||||
$43.17, expiration date 4/30/19 | 3,641,000 | 3,524,943 |
15
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Convertible Bonds (continued) | |||||||
• | Vector Group 2.50% exercise price | ||||||
$18.50, expiration date 1/14/19 | USD | 1,904,000 | $ | 2,223,948 | |||
* | VeriSign 3.25% exercise price | ||||||
$34.37, expiration date 8/15/37 | 5,543,000 | 8,134,353 | |||||
# | WellPoint 144A 2.75% exercise price | ||||||
$75.47, expiration date 10/15/42 | 4,650,000 | 5,568,375 | |||||
Total Convertible Bonds (cost $266,022,425) | 287,124,762 | ||||||
Corporate Bonds – 51.00% | |||||||
Automotive – 0.59% | |||||||
American Axle & Manufacturing | |||||||
*6.25% 3/15/21 | 4,920,000 | 5,209,050 | |||||
7.75% 11/15/19 | 142,000 | 162,945 | |||||
* | ArvinMeritor 8.125% 9/15/15 | 4,401,000 | 4,775,085 | ||||
* | Chrysler Group 8.25% 6/15/21 | 5,356,000 | 6,172,790 | ||||
Ford Motor 7.45% 7/16/31 | 12,734,000 | 17,007,237 | |||||
Ford Motor Credit 12.00% 5/15/15 | 10,732,000 | 13,007,313 | |||||
# | International Automotive Components | ||||||
Group 144A 9.125% 6/1/18 | 49,000 | 49,184 | |||||
Tomkins 9.00% 10/1/18 | 1,842,000 | 2,056,133 | |||||
*# | TRW Automotive 144A 4.50% 3/1/21 | 4,670,000 | 4,845,125 | ||||
53,284,862 | |||||||
Banking – 6.24% | |||||||
Abbey National Treasury Services | |||||||
4.00% 4/27/16 | 9,305,000 | 10,002,949 | |||||
AgriBank 9.125% 7/15/19 | 12,423,000 | 16,779,050 | |||||
# | Banco BTG Pactual 144A 4.00% 1/16/20 | 9,935,000 | 9,562,438 | ||||
# | Banco Santander Mexico 144A | ||||||
4.125% 11/9/22 | 14,635,000 | 14,781,350 | |||||
* | Bancolombia 5.125% 9/11/22 | 8,817,000 | 9,050,651 | ||||
# | Bank Nederlandse Gemeenten 144A | ||||||
2.50% 1/23/23 | 22,738,000 | 23,108,243 | |||||
Bank of America | |||||||
2.00% 1/11/18 | 35,550,000 | 35,703,575 | |||||
3.875% 3/22/17 | 8,245,000 | 8,902,605 | |||||
* | Barclays Bank 7.625% 11/21/22 | 9,995,000 | 10,219,888 | ||||
BB&T | |||||||
3.95% 3/22/22 | 250,000 | 271,884 | |||||
5.25% 11/1/19 | 20,134,000 | 23,574,941 |
16
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Banking (continued) | |||||||
*# | BBVA Banco Continental 144A | ||||||
3.25% 4/8/18 | USD | 9,770,000 | $ | 9,818,850 | |||
BBVA U.S. Senior 4.664% 10/9/15 | 7,345,000 | 7,637,324 | |||||
• | Branch Banking & Trust 0.60% 9/13/16 | 5,500,000 | 5,453,789 | ||||
# | Caixa Economica Federal 144A | ||||||
2.375% 11/6/17 | 2,620,000 | 2,564,980 | |||||
• | Citigroup 5.35% 5/29/49 | 9,975,000 | 10,049,673 | ||||
City National 5.25% 9/15/20 | 13,865,000 | 15,789,850 | |||||
• | Fifth Third Capital Trust IV 6.50% 4/15/37 | 19,171,000 | 19,302,705 | ||||
Goldman Sachs Group 3.375% 2/1/18 | CAD | 5,527,000 | 5,605,507 | ||||
*#• | HBOS Capital Funding 144A | ||||||
6.071% 6/29/49 | USD | 5,876,000 | 5,442,645 | ||||
# | HSBC Bank 144A 4.75% 1/19/21 | 15,300,000 | 17,875,495 | ||||
HSBC Holdings 4.00% 3/30/22 | 6,470,000 | 7,180,600 | |||||
JPMorgan Chase | |||||||
2.92% 9/19/17 | CAD | 8,630,000 | 8,741,018 | ||||
3.375% 5/1/23 | USD | 8,495,000 | 8,491,407 | ||||
4.25% 11/2/18 | NZD | 9,680,000 | 8,266,834 | ||||
•5.15% 12/29/49 | USD | 3,600,000 | 3,667,500 | ||||
JPMorgan Chase Bank | |||||||
6.00% 10/1/17 | 11,420,000 | 13,523,290 | |||||
#144A 6.00% 6/19/13 | BRL | 1,839,500 | 24,208,335 | ||||
KeyBank 6.95% 2/1/28 | USD | 19,095,000 | 24,095,293 | ||||
Morgan Stanley | |||||||
2.125% 4/25/18 | 14,975,000 | 15,025,735 | |||||
*7.375% 2/22/18 | AUD | 5,466,000 | 6,264,786 | ||||
7.60% 8/8/17 | NZD | 7,138,000 | 6,610,182 | ||||
• | National City Bank 0.651% 6/7/17 | USD | 10,600,000 | 10,491,721 | |||
PNC Bank 6.875% 4/1/18 | 18,049,000 | 22,428,770 | |||||
• | PNC Financial Services Group | ||||||
8.25% 5/29/49 | 12,972,000 | 13,062,908 | |||||
#• | PNC Preferred Funding Trust II 144A | ||||||
1.503% 3/31/49 | 13,400,000 | 11,859,000 | |||||
Regions Financial 2.00% 5/15/18 | 6,395,000 | 6,378,833 | |||||
# | Sberbank 144A 6.125% 2/7/22 | 9,750,000 | 11,151,563 | ||||
# | Standard Chartered 144A 3.95% 1/11/23 | 14,850,000 | 15,201,945 | ||||
SunTrust Bank | |||||||
•0.578% 8/24/15 | 6,285,000 | 6,194,703 | |||||
2.75% 5/1/23 | 4,765,000 | 4,791,493 |
17
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Banking (continued) | |||||||
SVB Financial Group 5.375% 9/15/20 | USD | 5,500,000 | $ | 6,308,473 | |||
# | Turkiye Halk Bankasi 144A 3.875% 2/5/20 | 7,190,000 | 7,261,900 | ||||
U.S. Bank 4.95% 10/30/14 | 5,005,000 | 5,319,629 | |||||
• | USB Capital IX 3.50% 10/29/49 | 28,382,000 | 26,679,079 | ||||
#• | USB Realty 144A 1.424% 12/22/49 | 4,700,000 | 4,218,250 | ||||
• | Wachovia 0.647% 10/15/16 | 7,950,000 | 7,857,542 | ||||
Zions Bancorp | |||||||
4.50% 3/27/17 | 7,355,000 | 8,045,980 | |||||
7.75% 9/23/14 | 3,805,000 | 4,131,172 | |||||
558,956,333 | |||||||
Basic Industry – 4.16% | |||||||
AK Steel 7.625% 5/15/20 | 3,309,000 | 2,887,103 | |||||
ArcelorMittal | |||||||
6.125% 6/1/18 | 107,000 | 117,336 | |||||
10.35% 6/1/19 | 13,310,000 | 16,927,152 | |||||
# | Axiall 144A 4.875% 5/15/23 | 2,125,000 | 2,228,594 | ||||
Barrick Gold | |||||||
*3.85% 4/1/22 | 9,665,000 | 9,722,806 | |||||
#144A 2.50% 5/1/18 | 4,240,000 | 4,265,220 | |||||
#144A 4.10% 5/1/23 | 4,500,000 | 4,518,342 | |||||
Barrick North America Finance | |||||||
4.40% 5/30/21 | 279,000 | 291,527 | |||||
Cabot | |||||||
2.55% 1/15/18 | 11,870,000 | 12,273,129 | |||||
3.70% 7/15/22 | 6,550,000 | 6,782,532 | |||||
Celanese U.S. Holdings 6.625% 10/15/18 | 2,276,000 | 2,497,910 | |||||
# | Cemex Espana Luxembourg 144A | ||||||
9.25% 5/12/20 | 10,090,000 | 11,149,450 | |||||
Century Aluminum 8.00% 5/15/14 | 5,096,000 | 5,115,110 | |||||
CF Industries | |||||||
6.875% 5/1/18 | 19,719,000 | 23,763,445 | |||||
7.125% 5/1/20 | 6,726,000 | 8,421,409 | |||||
Compass Minerals International | |||||||
8.00% 6/1/19 | 3,601,000 | 3,934,093 | |||||
Dow Chemical 8.55% 5/15/19 | 35,451,000 | 47,858,814 | |||||
duPont (E.I.) de Nemours 2.80% 2/15/23 | 1,675,000 | 1,724,217 | |||||
# | Essar Steel Algoma 144A 9.375% 3/15/15 | 28,000 | 26,740 |
18
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Basic Industry (continued) | |||||||
# | FMG Resources August 2006 144A | ||||||
*6.875% 2/1/18 | USD | 136,000 | $ | 145,350 | |||
*6.875% 4/1/22 | 1,963,000 | 2,112,679 | |||||
7.00% 11/1/15 | 3,967,000 | 4,175,268 | |||||
# | Freeport-McMoRan Copper & Gold 144A | ||||||
3.875% 3/15/23 | 19,960,000 | 20,159,579 | |||||
Georgia-Pacific 8.00% 1/15/24 | 23,421,000 | 33,041,175 | |||||
# | Gerdau Trade 144A 4.75% 4/15/23 | 9,635,000 | 9,709,527 | ||||
HD Supply | |||||||
*#144A 7.50% 7/15/20 | 2,744,000 | 2,977,240 | |||||
10.50% 1/15/21 | 8,000 | 8,420 | |||||
11.00% 4/15/20 | 2,915,000 | 3,600,025 | |||||
Headwaters 7.625% 4/1/19 | 6,972,000 | 7,582,050 | |||||
# | INEOS Group Holdings 144A | ||||||
8.50% 2/15/16 | 112,000 | 114,030 | |||||
# | Inmet Mining 144A 8.75% 6/1/20 | 52,000 | 56,420 | ||||
International Paper | |||||||
6.00% 11/15/41 | 5,590,000 | 6,828,928 | |||||
9.375% 5/15/19 | 2,347,000 | 3,256,094 | |||||
# | JMC Steel Group 144A 8.25% 3/15/18 | 57,000 | 59,921 | ||||
LyondellBasell Industries | |||||||
5.75% 4/15/24 | 8,525,000 | 10,292,582 | |||||
6.00% 11/15/21 | 4,560,000 | 5,541,982 | |||||
# | MacDermid 144A 9.50% 4/15/17 | 4,349,000 | 4,506,651 | ||||
# | Masonite International 144A 8.25% 4/15/21 | 63,000 | 70,875 | ||||
Mohawk Industries 6.375% 1/15/16 | 2,349,000 | 2,643,156 | |||||
# | Murray Energy 144A 10.25% 10/15/15 | 4,852,000 | 4,973,300 | ||||
# | New Gold 144A 6.25% 11/15/22 | 52,000 | 53,820 | ||||
Norcraft Finance 10.50% 12/15/15 | 3,525,000 | 3,696,844 | |||||
Nortek 8.50% 4/15/21 | 6,654,000 | 7,469,115 | |||||
Novelis 8.75% 12/15/20 | 7,055,000 | 8,042,700 | |||||
*# | PhosAgro 144A 4.204% 2/13/18 | 14,673,000 | 15,039,825 | ||||
# | PolyOne 144A 5.25% 3/15/23 | 3,550,000 | 3,763,000 | ||||
# | Polyus Gold International 144A 5.625% 4/29/20 | 5,405,000 | 5,535,315 | ||||
Praxair 1.25% 11/7/18 | 5,770,000 | 5,777,478 | |||||
Rockwood Specialties Group 4.625% 10/15/20 | 3,179,000 | 3,365,766 | |||||
# | Ryerson 144A | ||||||
9.00% 10/15/17 | 3,844,000 | 4,204,375 | |||||
*11.25% 10/15/18 | 1,604,000 | 1,740,340 |
19
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Basic Industry (continued) | |||||||
Southern Copper | |||||||
3.50% 11/8/22 | USD | 1,780,000 | $ | 1,789,608 | |||
5.25% 11/8/42 | 9,980,000 | 9,664,812 | |||||
# | Taminco Global Chemical 144A 9.75% 3/31/20 | 71,000 | 80,940 | ||||
# | TPC Group 144A 8.75% 12/15/20 | 2,872,000 | 3,044,320 | ||||
*# | Uralkali 144A 3.723% 4/30/18 | 6,925,000 | 6,950,159 | ||||
# | U.S. Coatings Acquisition 144A | ||||||
7.375% 5/1/21 | 4,685,000 | 5,018,806 | |||||
Vale Overseas 6.25% 1/23/17 | 500,000 | 579,742 | |||||
372,177,146 | |||||||
Brokerage – 0.56% | |||||||
• | Bear Stearns 3.40% 4/24/14 | AUD | 15,000,000 | 15,516,506 | |||
Jefferies Group | |||||||
5.125% 1/20/23 | USD | 6,985,000 | 7,594,343 | ||||
6.45% 6/8/27 | 4,100,000 | 4,617,154 | |||||
6.50% 1/20/43 | 2,635,000 | 2,907,767 | |||||
Lazard Group 6.85% 6/15/17 | 16,889,000 | 19,443,158 | |||||
50,078,928 | |||||||
Capital Goods – 1.06% | |||||||
Anixter 10.00% 3/15/14 | 2,164,000 | 2,320,890 | |||||
# | Ardagh Packaging Finance 144A | ||||||
7.00% 11/15/20 | 4,510,000 | 4,780,600 | |||||
Berry Plastics 9.75% 1/15/21 | 5,275,000 | 6,277,250 | |||||
Case New Holland 7.75% 9/1/13 | 4,069,000 | 4,155,466 | |||||
# | Cemex 144A 9.50% 6/15/18 | 2,295,000 | 2,627,775 | ||||
# | Cemex Finance 144A 9.375% 10/12/22 | 4,020,000 | 4,633,050 | ||||
# | Consolidated Container 144A | ||||||
10.125% 7/15/20 | 3,056,000 | 3,407,440 | |||||
# | Crown Americas 144A 4.50% 1/15/23 | 2,125,000 | 2,180,781 | ||||
# | GenCorp 144A 7.125% 3/15/21 | 25,000 | 27,063 | ||||
Kratos Defense & Security Solutions | |||||||
10.00% 6/1/17 | 2,949,000 | 3,266,018 | |||||
# | Milacron 144A 7.75% 2/15/21 | 2,775,000 | 2,899,875 | ||||
Mueller Water Products 7.375% 6/1/17 | 28,000 | 28,910 | |||||
# | Plastipak Holdings 144A | ||||||
10.625% 8/15/19 | 3,693,000 | 4,228,485 | |||||
Reynolds Group Issuer | |||||||
9.00% 4/15/19 | 13,490,000 | 14,636,649 | |||||
9.875% 8/15/19 | 235,000 | 264,375 |
20
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Capital Goods (continued) | |||||||
Rock Tenn 4.00% 3/1/23 | USD | 1,880,000 | $ | 1,957,477 | |||
# | Sealed Air 144A | ||||||
6.50% 12/1/20 | 4,235,000 | 4,753,788 | |||||
8.125% 9/15/19 | 18,000 | 20,700 | |||||
8.375% 9/15/21 | 42,000 | 49,350 | |||||
# | Silver II Borrower 144A 7.75% 12/15/20 | 1,400,000 | 1,508,500 | ||||
# | URS 144A | ||||||
4.10% 4/1/17 | 5,477,000 | 5,771,071 | |||||
5.25% 4/1/22 | 6,160,000 | 6,560,807 | |||||
# | Votorantim Cimentos 144A 7.25% 4/5/41 | 16,180,000 | 18,566,549 | ||||
94,922,869 | |||||||
Communications – 7.18% | |||||||
AMC Networks 4.75% 12/15/22 | 4,770,000 | 4,925,025 | |||||
America Movil | |||||||
3.125% 7/16/22 | 7,000,000 | 7,140,889 | |||||
5.00% 3/30/20 | 11,125,000 | 12,862,569 | |||||
American Tower 5.90% 11/1/21 | 12,470,000 | 14,926,178 | |||||
# | American Tower Trust I 144A | ||||||
1.551% 3/15/18 | 4,560,000 | 4,626,742 | |||||
3.07% 3/15/23 | 10,990,000 | 11,304,385 | |||||
Bell Canada 3.35% 3/22/23 | CAD | 14,736,000 | 14,965,791 | ||||
# | CC Holdings GS V 144A 3.849% 4/15/23 | USD | 6,590,000 | 6,809,763 | |||
CCO Holdings | |||||||
5.25% 9/30/22 | 3,978,000 | 4,072,478 | |||||
7.375% 6/1/20 | 2,300,000 | 2,593,250 | |||||
CenturyLink 5.80% 3/15/22 | 13,225,000 | 14,023,010 | |||||
# | Cequel Communications Holdings I 144A | ||||||
6.375% 9/15/20 | 42,000 | 44,940 | |||||
Clear Channel Communications 9.00% 3/1/21 | 3,263,000 | 3,205,898 | |||||
Clear Channel Worldwide Holdings | |||||||
7.625% 3/15/20 | 6,075,000 | 6,570,078 | |||||
# | Clearwire Communications 144A 12.00% 12/1/15 | 4,003,000 | 4,290,715 | ||||
# | Columbus International 144A 11.50% 11/20/14 | 8,041,000 | 8,985,818 | ||||
# | Cox Communications 144A | ||||||
2.95% 6/30/23 | 4,860,000 | 4,859,772 | |||||
3.25% 12/15/22 | 20,775,000 | 21,557,884 | |||||
# | Crown Castle Towers 144A | ||||||
4.883% 8/15/20 | 47,960,000 | 55,438,450 |
21
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Communications (continued) | |||||||
CSC Holdings 6.75% 11/15/21 | USD | 2,110,000 | $ | 2,421,225 | |||
# | Deutsche Telekom International Finance | ||||||
144A 2.25% 3/6/17 | 6,570,000 | 6,752,475 | |||||
# | Digicel 144A | ||||||
6.00% 4/15/21 | 5,320,000 | 5,346,600 | |||||
8.25% 9/1/17 | 2,277,000 | 2,407,928 | |||||
# | Digicel Group 144A | ||||||
8.25% 9/30/20 | 2,224,000 | 2,390,800 | |||||
10.50% 4/15/18 | 3,910,000 | 4,349,875 | |||||
DISH DBS | |||||||
#144A 5.00% 3/15/23 | 50,000 | 48,750 | |||||
5.875% 7/15/22 | 1,529,000 | 1,567,225 | |||||
7.125% 2/1/16 | 415,000 | 460,650 | |||||
7.875% 9/1/19 | 6,206,000 | 7,105,870 | |||||
Entravision Communications 8.75% 8/1/17 | 2,144,000 | 2,320,880 | |||||
Equinix | |||||||
4.875% 4/1/20 | 2,645,000 | 2,777,250 | |||||
5.375% 4/1/23 | 1,775,000 | 1,868,188 | |||||
# | Griffey Intermediate 144A 7.00% 10/15/20 | 54,000 | 54,945 | ||||
Hughes Satellite Systems 7.625% 6/15/21 | 2,275,000 | 2,621,938 | |||||
Intelsat Bermuda 11.25% 2/4/17 | 5,595,000 | 5,965,669 | |||||
Intelsat Jackson Holdings 7.25% 10/15/20 | 3,558,000 | 3,962,723 | |||||
# | Intelsat Luxembourg 144A | ||||||
7.75% 6/1/21 | 4,725,000 | 4,996,688 | |||||
8.125% 6/1/23 | 1,235,000 | 1,319,906 | |||||
Interpublic Group | |||||||
3.75% 2/15/23 | 8,855,000 | 8,926,026 | |||||
4.00% 3/15/22 | 12,800,000 | 13,254,170 | |||||
Lamar Media 5.00% 5/1/23 | 5,085,000 | 5,199,413 | |||||
Level 3 Communications | |||||||
#144A 8.875% 6/1/19 | 21,000 | 23,284 | |||||
11.875% 2/1/19 | 3,021,000 | 3,568,556 | |||||
Level 3 Financing | |||||||
#144A 7.00% 6/1/20 | 27,000 | 28,654 | |||||
10.00% 2/1/18 | 4,182,000 | 4,626,338 | |||||
# | MDC Partners 144A 6.75% 4/1/20 | 4,130,000 | 4,315,850 | ||||
MetroPCS Wireless | |||||||
#144A 6.25% 4/1/21 | 460,000 | 495,650 | |||||
6.625% 11/15/20 | 2,908,000 | 3,158,815 |
22
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Communications (continued) | |||||||
# | Myriad International Holding 144A | ||||||
6.375% 7/28/17 | USD | 11,040,000 | $ | 12,572,352 | |||
# | Nara Cable Funding 144A 8.875% 12/1/18 | 6,560,000 | 7,052,000 | ||||
# | NBCUniversal Enterprise 144A 1.974% 4/15/19 | 4,470,000 | 4,550,929 | ||||
# | Nexstar Broadcasting 144A 6.875% 11/15/20 | 53,000 | 56,710 | ||||
Nielsen Finance 11.625% 2/1/14 | 1,527,000 | 1,647,251 | |||||
*# | Oi 144A 5.75% 2/10/22 | 17,413,000 | 18,414,247 | ||||
# | Qtel International Finance 144A | ||||||
3.25% 2/21/23 | 7,195,000 | 7,123,050 | |||||
4.50% 1/31/43 | 2,770,000 | 2,745,763 | |||||
Qwest 6.75% 12/1/21 | 12,490,000 | 14,724,211 | |||||
Satelites Mexicanos 9.50% 5/15/17 | 30,000 | 32,775 | |||||
# | SBA Tower Trust 144A 2.24% 4/15/18 | 7,770,000 | 7,817,047 | ||||
# | SES 144A 3.60% 4/4/23 | 16,124,000 | 16,793,064 | ||||
# | Sinclair Television Group 144A | ||||||
5.375% 4/1/21 | 5,010,000 | 5,097,675 | |||||
6.125% 10/1/22 | 2,193,000 | 2,335,545 | |||||
# | Sirius XM Radio 144A 8.75% 4/1/15 | 4,500,000 | 5,062,500 | ||||
# | Softbank 144A 4.50% 4/15/20 | 3,500,000 | 3,631,201 | ||||
Sprint Capital 8.75% 3/15/32 | 3,495,000 | 4,150,313 | |||||
Sprint Nextel | |||||||
6.00% 12/1/16 | 2,955,000 | 3,213,563 | |||||
8.375% 8/15/17 | 3,330,000 | 3,896,100 | |||||
9.125% 3/1/17 | 5,257,000 | 6,216,403 | |||||
*# | TBG Global 144A 4.625% 4/3/18 | 5,700,000 | 5,778,090 | ||||
# | Telefonica Chile 144A 3.875% 10/12/22 | 15,435,000 | 15,295,714 | ||||
Telefonica Emisiones | |||||||
3.192% 4/27/18 | 15,060,000 | 15,260,569 | |||||
4.57% 4/27/23 | 2,550,000 | 2,622,096 | |||||
Telesat Canada | |||||||
#144A 6.00% 5/15/17 | 3,660,000 | 3,911,625 | |||||
12.50% 11/1/17 | 1,932,000 | 2,055,648 | |||||
Time Warner 4.70% 1/15/21 | 250,000 | 288,677 | |||||
Time Warner Cable | |||||||
5.85% 5/1/17 | 7,452,000 | 8,703,310 | |||||
8.25% 4/1/19 | 14,091,000 | 18,514,432 | |||||
# | Univision Communications 144A | ||||||
6.75% 9/15/22 | 1,605,000 | 1,789,575 | |||||
6.875% 5/15/19 | 5,325,000 | 5,844,188 | |||||
8.50% 5/15/21 | 91,000 | 101,920 |
23
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Communications (continued) | |||||||
# | UPC Holding 144A 9.875% 4/15/18 | USD | 2,304,000 | $ | 2,580,480 | ||
# | UPCB Finance III 144A 6.625% 7/1/20 | 9,469,000 | 10,344,883 | ||||
# | VeriSign 144A 4.625% 5/1/23 | 3,495,000 | 3,599,850 | ||||
Viacom 3.25% 3/15/23 | 10,710,000 | 10,992,305 | |||||
# | VimpelCom 144A 7.748% 2/2/21 | 11,884,000 | 13,622,035 | ||||
Virgin Media Finance 8.375% 10/15/19 | 2,267,000 | 2,570,211 | |||||
Virgin Media Secured Finance 6.50% 1/15/18 | 35,143,000 | 37,603,009 | |||||
# | Vivendi 144A | ||||||
3.45% 1/12/18 | 400,000 | 416,338 | |||||
6.625% 4/4/18 | 26,463,000 | 31,309,592 | |||||
Vodafone Group 2.95% 2/19/23 | 11,370,000 | 11,466,293 | |||||
# | Wind Acquisition Finance 144A | ||||||
6.50% 4/30/20 | 800,000 | 841,000 | |||||
11.75% 7/15/17 | 3,221,000 | 3,470,628 | |||||
Windstream | |||||||
7.50% 6/1/22 | 29,000 | 32,118 | |||||
7.50% 4/1/23 | 1,405,000 | 1,538,475 | |||||
* | Zayo Group 10.125% 7/1/20 | 44,000 | 52,250 | ||||
643,277,986 | |||||||
Consumer Cyclical – 3.25% | |||||||
# | ADT 144A 4.125% 6/15/23 | 7,400,000 | 7,784,600 | ||||
Amazon.com 2.50% 11/29/22 | 22,515,000 | 22,155,862 | |||||
# | BC Mountain 144A 7.00% 2/1/21 | 16,000 | 17,240 | ||||
Burlington Coat Factory Warehouse | |||||||
10.00% 2/15/19 | 56,000 | 62,930 | |||||
# | CDR DB Sub 144A 7.75% 10/15/20 | 62,000 | 65,333 | ||||
CKE Restaurants 11.375% 7/15/18 | 533,000 | 560,322 | |||||
# | Daimler Finance North America 144A | ||||||
2.25% 7/31/19 | 12,115,000 | 12,239,759 | |||||
Dave & Buster’s 11.00% 6/1/18 | 1,819,000 | 2,066,839 | |||||
#^ | Dave & Buster’s Entertainment 144A | ||||||
9.321% 2/15/16 | 69,000 | 53,561 | |||||
Delphi 6.125% 5/15/21 | 6,275,000 | 7,051,531 | |||||
Dollar General | |||||||
1.875% 4/15/18 | 6,715,000 | 6,760,011 | |||||
3.25% 4/15/23 | 9,210,000 | 9,255,857 | |||||
4.125% 7/15/17 | 2,375,000 | 2,602,098 | |||||
eBay 4.00% 7/15/42 | 12,085,000 | 11,432,748 |
24
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Consumer Cyclical (continued) | |||||||
Express 8.75% 3/1/18 | USD | 84,000 | $ | 91,770 | |||
Ford Motor Credit | |||||||
5.00% 5/15/18 | 8,755,000 | 9,784,894 | |||||
5.875% 8/2/21 | 9,030,000 | 10,554,282 | |||||
Hanesbrands 6.375% 12/15/20 | 5,070,000 | 5,634,038 | |||||
Historic TW 6.875% 6/15/18 | 26,504,000 | 33,193,052 | |||||
Host Hotels & Resorts | |||||||
3.75% 10/15/23 | 3,170,000 | 3,241,325 | |||||
4.75% 3/1/23 | 10,475,000 | 11,443,937 | |||||
5.25% 3/15/22 | 5,645,000 | 6,322,400 | |||||
5.875% 6/15/19 | 3,275,000 | 3,639,344 | |||||
# | Hyundai Capital America 144A 2.125% 10/2/17 | 9,380,000 | 9,412,239 | ||||
Ingles Markets 8.875% 5/15/17 | 3,502,000 | 3,677,100 | |||||
# | Landry’s 144A 9.375% 5/1/20 | 54,000 | 59,738 | ||||
Levi Strauss | |||||||
6.875% 5/1/22 | 2,785,000 | 3,122,681 | |||||
#144A 6.875% 5/1/22 | 1,390,000 | 1,558,538 | |||||
7.625% 5/15/20 | 1,380,000 | 1,540,425 | |||||
Michaels Stores 11.375% 11/1/16 | 17,000 | 17,850 | |||||
# | Pantry 144A 8.375% 8/1/20 | 54,000 | 59,265 | ||||
# | Party City Holdings 144A 8.875% 8/1/20 | 59,000 | 66,965 | ||||
* | Quiksilver 6.875% 4/15/15 | 6,676,000 | 6,692,824 | ||||
# | QVC 144A 4.375% 3/15/23 | 11,935,000 | 12,247,481 | ||||
# | Rent-A-Center 144A 4.75% 5/1/21 | 2,585,000 | 2,617,313 | ||||
Rite Aid 9.25% 3/15/20 | 4,187,000 | 4,867,388 | |||||
# | SACI Falabella 144A 3.75% 4/30/23 | 5,895,000 | 5,921,528 | ||||
Sally Holdings 5.75% 6/1/22 | 4,291,000 | 4,645,008 | |||||
# | Tempur-Pedic International 144A | ||||||
6.875% 12/15/20 | 30,000 | 32,888 | |||||
*# | Tenedora Nemak 144A 5.50% 2/28/23 | 7,940,000 | 8,267,525 | ||||
TJX 2.50% 5/15/23 | 4,480,000 | 4,499,421 | |||||
Walgreen 3.10% 9/15/22 | 17,435,000 | 17,761,940 | |||||
# | Wesfarmers 144A 1.874% 3/20/18 | 7,255,000 | 7,370,217 | ||||
Western Union | |||||||
2.875% 12/10/17 | 4,730,000 | 4,845,369 | |||||
3.65% 8/22/18 | 7,015,000 | 7,340,945 | |||||
# | Wok Acquisition 144A 10.25% 6/30/20 | 26,000 | 28,698 |
25
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Consumer Cyclical (continued) | |||||||
Wyndham Worldwide | |||||||
2.50% 3/1/18 | USD | 5,895,000 | $ | 5,949,493 | |||
4.25% 3/1/22 | 4,805,000 | 5,095,621 | |||||
5.625% 3/1/21 | 6,755,000 | 7,705,260 | |||||
291,417,453 | |||||||
Consumer Non-Cyclical – 4.41% | |||||||
# | Alphabet Holding PIK 144A 7.75% 11/1/17 | 20,000 | 20,950 | ||||
*# | Anadolu Efes Biracilik Ve Malt Sanayii AS | ||||||
144A 3.375% 11/1/22 | 9,635,000 | 9,514,563 | |||||
*# | BFF International 144A 7.25% 1/28/20 | 4,025,000 | 4,885,344 | ||||
Boston Scientific 6.00% 1/15/20 | 7,335,000 | 8,671,026 | |||||
# | BRF-Brasil Foods 144A 5.875% 6/6/22 | 9,025,000 | 10,293,013 | ||||
CareFusion | |||||||
#144A 3.30% 3/1/23 | 8,730,000 | 8,946,661 | |||||
6.375% 8/1/19 | 35,940,000 | 43,359,704 | |||||
Celgene | |||||||
3.25% 8/15/22 | 4,385,000 | 4,519,830 | |||||
3.95% 10/15/20 | 11,675,000 | 12,860,806 | |||||
Constellation Brands | |||||||
3.75% 5/1/21 | 765,000 | 779,344 | |||||
4.25% 5/1/23 | 2,805,000 | 2,885,644 | |||||
6.00% 5/1/22 | 5,325,000 | 6,170,344 | |||||
# | Cosan Luxembourg 144A | ||||||
5.00% 3/14/23 | 6,735,000 | 6,876,435 | |||||
9.50% 3/14/18 | BRL | 6,005,000 | 3,136,436 | ||||
Del Monte 7.625% 2/15/19 | USD | 7,242,000 | 7,757,993 | ||||
# | Dole Food 144A 8.00% 10/1/16 | 3,055,000 | 3,177,200 | ||||
Energizer Holdings 4.70% 5/24/22 | 17,635,000 | 19,051,955 | |||||
*# | ESAL 144A 6.25% 2/5/23 | 12,240,000 | 12,227,760 | ||||
GlaxoSmithKline Capital 2.80% 3/18/23 | 9,100,000 | 9,377,714 | |||||
# | Hawk Acquisition Sub 144A 4.25% 10/15/20 | 2,250,000 | 2,283,750 | ||||
# | Heineken 144A 3.40% 4/1/22 | 15,790,000 | 16,659,966 | ||||
# | Imperial Tobacco Finance 144A 3.50% 2/11/23 | 12,785,000 | 13,119,762 | ||||
Jarden | |||||||
6.125% 11/15/22 | 2,145,000 | 2,346,094 | |||||
7.50% 1/15/20 | 2,320,000 | 2,560,700 | |||||
# | Korea Expressway 144A 1.875% 10/22/17 | 9,585,000 | 9,566,904 | ||||
Laboratory Corporation of America | |||||||
Holdings 2.20% 8/23/17 | 14,275,000 | 14,496,705 |
26
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Consumer Non-Cyclical (continued) | |||||||
Medtronic | |||||||
2.75% 4/1/23 | USD | 4,710,000 | $ | 4,798,322 | |||
4.00% 4/1/43 | 2,090,000 | 2,123,731 | |||||
Molson Coors Brewing 5.00% 5/1/42 | 10,515,000 | 11,677,717 | |||||
# | Mylan 144A 3.125% 1/15/23 | 3,210,000 | 3,203,201 | ||||
NBTY 9.00% 10/1/18 | 7,236,000 | 8,185,725 | |||||
Newell Rubbermaid 2.05% 12/1/17 | 5,925,000 | 5,988,996 | |||||
# | Pernod-Ricard 144A | ||||||
5.50% 1/15/42 | 885,000 | 1,030,410 | |||||
5.75% 4/7/21 | 21,398,000 | 25,773,098 | |||||
Quest Diagnostics 4.70% 4/1/21 | 11,650,000 | 12,862,532 | |||||
# | SABMiller Holdings 144A 3.75% 1/15/22 | 13,190,000 | 14,449,988 | ||||
Scotts Miracle-Gro 6.625% 12/15/20 | 3,518,000 | 3,887,390 | |||||
Smithfield Foods 6.625% 8/15/22 | 4,160,000 | 4,628,000 | |||||
# | Spectrum Brands Escrow 144A | ||||||
6.375% 11/15/20 | 4,635,000 | 5,075,325 | |||||
6.625% 11/15/22 | 38,000 | 41,990 | |||||
Visant 10.00% 10/1/17 | 31,000 | 30,225 | |||||
Yale University 2.90% 10/15/14 | 3,678,000 | 3,818,099 | |||||
Zimmer Holdings | |||||||
3.375% 11/30/21 | 12,500,000 | 13,106,388 | |||||
4.625% 11/30/19 | 16,726,000 | 19,137,705 | |||||
# | Zoetis 144A 3.25% 2/1/23 | 19,345,000 | 19,903,257 | ||||
395,268,702 | |||||||
Electric – 3.76% | |||||||
Ameren Illinois 9.75% 11/15/18 | 17,440,000 | 24,594,916 | |||||
American Electric Power 1.65% 12/15/17 | 1,010,000 | 1,021,108 | |||||
# | American Transmission Systems 144A | ||||||
5.25% 1/15/22 | 20,345,000 | 23,911,620 | |||||
# | APT Pipelines 144A 3.875% 10/11/22 | 7,390,000 | 7,474,460 | ||||
CenterPoint Energy 5.95% 2/1/17 | 11,365,000 | 13,198,175 | |||||
CMS Energy 6.25% 2/1/20 | 8,285,000 | 10,228,885 | |||||
ComEd Financing III 6.35% 3/15/33 | 9,274,000 | 9,830,440 | |||||
Duquense Light Holdings 5.50% 8/15/15 | 3,168,000 | 3,463,616 | |||||
*#• | Electricite de France 144A 5.25% 12/29/49 | 12,960,000 | 13,060,738 | ||||
Exelon Generation 4.25% 6/15/22 | 15,555,000 | 16,608,680 | |||||
• | FPL Group Capital | ||||||
6.35% 10/1/66 | 16,936,000 | 17,987,099 | |||||
6.65% 6/15/67 | 1,160,000 | 1,248,124 |
27
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Electric (continued) | |||||||
Great Plains Energy 5.292% 6/15/22 | USD | 15,135,000 | $ | 17,491,429 | |||
Indiana Michigan Power 3.20% 3/15/23 | 4,380,000 | 4,503,350 | |||||
• | Integrys Energy Group 6.11% 12/1/66 | 14,555,000 | 15,440,686 | ||||
Ipalco Enterprises 5.00% 5/1/18 | 5,745,000 | 6,233,325 | |||||
Kansas City Power & Light 3.15% 3/15/23 | 3,540,000 | 3,652,271 | |||||
LG&E & KU Energy | |||||||
3.75% 11/15/20 | 12,102,000 | 13,108,826 | |||||
4.375% 10/1/21 | 16,415,000 | 18,210,309 | |||||
# | Narragansett Electric 144A 4.17% 12/10/42 | 6,645,000 | 6,808,254 | ||||
Pennsylvania Electric 5.20% 4/1/20 | 9,953,000 | 11,478,038 | |||||
• | PPL Capital Funding 6.70% 3/30/67 | 6,100,000 | 6,486,819 | ||||
Public Service Company of Oklahoma | |||||||
5.15% 12/1/19 | 14,625,000 | 17,113,795 | |||||
Puget Energy 6.00% 9/1/21 | 4,685,000 | 5,404,429 | |||||
• | Puget Sound Energy 6.974% 6/1/67 | 18,119,000 | 19,556,761 | ||||
# | Saudi Electricity Global Sukuk 2 144A | ||||||
3.473% 4/8/23 | 5,915,000 | 6,021,766 | |||||
5.06% 4/8/43 | 6,695,000 | 7,059,878 | |||||
SCANA 4.125% 2/1/22 | 12,490,000 | 13,315,552 | |||||
• | Wisconsin Energy 6.25% 5/15/67 | 20,260,000 | 22,103,173 | ||||
336,616,522 | |||||||
Energy – 5.27% | |||||||
American Petroleum Tankers Parent | |||||||
10.25% 5/1/15 | 320,000 | 328,202 | |||||
AmeriGas Partners | |||||||
6.50% 5/20/21 | 1,467,000 | 1,606,365 | |||||
6.75% 5/20/20 | 1,290,000 | 1,435,125 | |||||
7.00% 5/20/22 | 1,521,000 | 1,707,323 | |||||
Antero Resources Finance | |||||||
6.00% 12/1/20 | 40,000 | 42,500 | |||||
9.375% 12/1/17 | 2,575,000 | 2,813,188 | |||||
* | Apache 2.625% 1/15/23 | 2,970,000 | 2,950,992 | ||||
# | Atlas Pipeline Partners 144A 5.875% 8/1/23 | 1,525,000 | 1,570,750 | ||||
Calumet Specialty Products Partners | |||||||
9.375% 5/1/19 | 78,000 | 87,750 | |||||
Chaparral Energy | |||||||
#144A 7.625% 11/15/22 | 24,000 | 26,400 | |||||
8.25% 9/1/21 | 58,000 | 65,830 |
28
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Energy (continued) | |||||||
Chesapeake Energy | |||||||
5.375% 6/15/21 | USD | 620,000 | $ | 647,900 | |||
5.75% 3/15/23 | 7,150,000 | 7,775,625 | |||||
*6.125% 2/15/21 | 14,000 | 15,470 | |||||
6.625% 8/15/20 | 68,000 | 77,265 | |||||
Comstock Resources 7.75% 4/1/19 | 2,311,000 | 2,484,325 | |||||
# | Continental Resources 144A 4.50% 4/15/23 | 3,465,000 | 3,698,888 | ||||
Copano Energy | |||||||
7.125% 4/1/21 | 79,000 | 91,838 | |||||
7.75% 6/1/18 | 3,582,000 | 3,752,145 | |||||
Crosstex Energy | |||||||
7.125% 6/1/22 | 120,000 | 130,800 | |||||
8.875% 2/15/18 | 225,000 | 246,938 | |||||
# | Drill Rigs Holdings 144A 6.50% 10/1/17 | 54,000 | 54,945 | ||||
Ecopetrol 7.625% 7/23/19 | 16,072,000 | 20,572,159 | |||||
# | ENI 144A 4.15% 10/1/20 | 14,330,000 | 15,124,670 | ||||
* | Forest Oil 7.25% 6/15/19 | 3,866,000 | 3,933,655 | ||||
*# | Gazprom 144A 3.85% 2/6/20 | 7,220,000 | 7,342,740 | ||||
# | Gazprom Neft 144A 4.375% 9/19/22 | 14,910,000 | 15,003,188 | ||||
# | Halcon Resources 144A 8.875% 5/15/21 | 2,621,000 | 2,824,128 | ||||
# | Helix Energy Solutions Group 144A | ||||||
9.50% 1/15/16 | 3,204,000 | 3,300,120 | |||||
# | Hercules Offshore 144A 10.50% 10/15/17 | 6,614,000 | 7,225,795 | ||||
# | Hilcorp Energy I 144A | ||||||
7.625% 4/15/21 | 2,640,000 | 2,937,000 | |||||
8.00% 2/15/20 | 287,000 | 320,005 | |||||
Holly 9.875% 6/15/17 | 4,289,000 | 4,543,209 | |||||
# | IPIC GMTN 144A 5.50% 3/1/22 | 8,735,000 | 10,372,813 | ||||
# | KazMunayGas National 144A 5.75% 4/30/43 | 7,225,000 | 7,369,500 | ||||
Key Energy Services 6.75% 3/1/21 | 2,085,000 | 2,189,250 | |||||
Kodiak Oil & Gas | |||||||
#144A 5.50% 1/15/21 | 11,000 | 11,619 | |||||
8.125% 12/1/19 | 4,015,000 | 4,587,138 | |||||
Laredo Petroleum | |||||||
7.375% 5/1/22 | 13,000 | 14,365 | |||||
9.50% 2/15/19 | 59,000 | 67,555 |
29
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Energy (continued) | |||||||
Linn Energy | |||||||
#144A 6.25% 11/1/19 | USD | 1,435,000 | $ | 1,506,750 | |||
6.50% 5/15/19 | 1,236,000 | 1,316,340 | |||||
8.625% 4/15/20 | 2,812,000 | 3,156,470 | |||||
Lukoil International Finance 6.125% 11/9/20 | 16,320,000 | 18,767,999 | |||||
Newfield Exploration 5.625% 7/1/24 | 8,650,000 | 9,342,000 | |||||
* | Noble Holding International 3.95% 3/15/22 | 18,005,000 | 18,869,509 | ||||
Oasis Petroleum 7.25% 2/1/19 | 44,000 | 47,960 | |||||
# | PDC Energy 144A 7.75% 10/15/22 | 1,798,000 | 1,973,305 | ||||
Pemex Project Funding Master Trust | |||||||
6.625% 6/15/35 | 4,660,000 | 5,884,545 | |||||
Petrobras International Finance | |||||||
5.375% 1/27/21 | 15,086,000 | 16,734,402 | |||||
Petrohawk Energy 7.25% 8/15/18 | 15,383,000 | 17,043,964 | |||||
* | Petroleos de Venezuela 9.00% 11/17/21 | 21,858,000 | 20,710,454 | ||||
Petroleos Mexicanos | |||||||
#144A 3.50% 1/30/23 | 11,715,000 | 11,949,300 | |||||
5.50% 6/27/44 | 6,185,000 | 6,788,038 | |||||
Pioneer Energy Services 9.875% 3/15/18 | 244,000 | 269,315 | |||||
Pride International 6.875% 8/15/20 | 38,285,000 | 48,729,185 | |||||
*# | PTT 144A 3.375% 10/25/22 | 9,965,000 | 10,070,489 | ||||
Range Resources | |||||||
5.00% 8/15/22 | 213,000 | 227,910 | |||||
5.75% 6/1/21 | 1,840,000 | 2,019,400 | |||||
8.00% 5/15/19 | 5,208,000 | 5,728,800 | |||||
# | Ras Laffan Liquefied Natural Gas III 144A | ||||||
5.832% 9/30/16 | 5,037,522 | 5,453,118 | |||||
# | Regency Energy Partners 144A | ||||||
4.50% 11/1/23 | 6,410,000 | 6,650,375 | |||||
Rosetta Resources 5.625% 5/1/21 | 7,005,000 | 7,311,469 | |||||
# | Samson Investment 144A 9.75% 2/15/20 | 4,948,000 | 5,281,990 | ||||
SandRidge Energy | |||||||
7.50% 3/15/21 | 1,868,000 | 1,947,390 | |||||
8.125% 10/15/22 | 4,554,000 | 4,872,780 | |||||
8.75% 1/15/20 | 30,000 | 32,400 | |||||
# | Sinopec Capital 2013 144A | ||||||
1.875% 4/24/18 | 9,125,000 | 9,129,261 | |||||
*3.125% 4/24/23 | 5,895,000 | 5,820,157 |
30
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Energy (continued) | |||||||
# | Sinopec Group Overseas Development 2012 | ||||||
144A 2.75% 5/17/17 | USD | 1,120,000 | $ | 1,169,492 | |||
Suburban Propane Partners 7.375% 8/1/21 | 2,025,000 | 2,262,938 | |||||
Talisman Energy 5.50% 5/15/42 | 24,040,000 | 26,115,613 | |||||
Total Capital Canada 2.75% 7/15/23 | 14,475,000 | 14,759,434 | |||||
Weatherford International | |||||||
4.50% 4/15/22 | 6,630,000 | 7,072,440 | |||||
9.625% 3/1/19 | 10,546,000 | 13,961,069 | |||||
# | Woodside Finance 144A | ||||||
8.125% 3/1/14 | 4,095,000 | 4,337,981 | |||||
8.75% 3/1/19 | 11,176,000 | 14,975,337 | |||||
471,638,852 | |||||||
Finance Companies – 1.98% | |||||||
# | CDP Financial 144A | ||||||
4.40% 11/25/19 | 20,171,000 | 23,425,672 | |||||
5.60% 11/25/39 | 3,130,000 | 3,964,480 | |||||
E Trade Financial 6.375% 11/15/19 | 6,058,000 | 6,542,640 | |||||
General Electric Capital | |||||||
2.10% 12/11/19 | 3,465,000 | 3,559,328 | |||||
3.10% 1/9/23 | 7,970,000 | 8,103,529 | |||||
#144A 3.80% 6/18/19 | 7,075,000 | 7,676,672 | |||||
6.00% 8/7/19 | 31,670,000 | 38,852,755 | |||||
•6.25% 12/15/49 | 12,300,000 | 13,622,963 | |||||
•7.125% 12/15/49 | 6,300,000 | 7,387,720 | |||||
•# | ILFC E-Capital Trust I 144A 4.68% 12/21/65 | 2,480,000 | 2,244,400 | ||||
•# | ILFC E-Capital Trust II 144A 6.25% 12/21/65 | 3,001,000 | 2,865,955 | ||||
International Lease Finance | |||||||
5.875% 4/1/19 | 3,775,000 | 4,161,522 | |||||
6.25% 5/15/19 | 3,232,000 | 3,640,040 | |||||
6.625% 11/15/13 | 170,000 | 175,313 | |||||
8.25% 12/15/20 | 3,395,000 | 4,252,238 | |||||
8.75% 3/15/17 | 6,429,000 | 7,763,018 | |||||
• | National Rural Utilities Cooperative Finance | ||||||
4.75% 4/30/43 | 10,255,000 | 10,485,738 | |||||
# | Nuveen Investments 144A 9.50% 10/15/20 | 9,584,000 | 10,374,680 | ||||
# | Rosneft Oil 144A 4.199% 3/6/22 | 7,186,000 | 7,239,895 | ||||
# | Temasek Financial I 144A 2.375% 1/23/23 | 11,275,000 | 11,110,114 | ||||
177,448,672 |
31
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Healthcare – 0.95% | |||||||
Accellent 8.375% 2/1/17 | USD | 2,810,000 | $ | 3,006,700 | |||
Air Medical Group Holdings 9.25% 11/1/18 | 3,877,000 | 4,313,163 | |||||
Alere | |||||||
#144A 7.25% 7/1/18 | 1,178,000 | 1,275,185 | |||||
9.00% 5/15/16 | 44,000 | 46,283 | |||||
Bio-Rad Laboratories 8.00% 9/15/16 | 2,021,000 | 2,159,297 | |||||
# | Biomet 144A | ||||||
6.50% 8/1/20 | 3,430,000 | 3,751,563 | |||||
6.50% 10/1/20 | 1,078,000 | 1,131,900 | |||||
# | CDRT Holding PIK 144A 9.25% 10/1/17 | 26,000 | 27,268 | ||||
Community Health Systems | |||||||
7.125% 7/15/20 | 30,000 | 33,563 | |||||
8.00% 11/15/19 | 2,251,000 | 2,563,326 | |||||
# | Fresenius Medical Care U.S. Finance II | ||||||
144A 5.875% 1/31/22 | 4,333,000 | 4,982,949 | |||||
HCA 7.50% 2/15/22 | 6,464,000 | 7,740,639 | |||||
HCA Holdings 7.75% 5/15/21 | 7,174,000 | 8,151,457 | |||||
Immucor 11.125% 8/15/19 | 47,000 | 54,168 | |||||
Kinetic Concepts | |||||||
10.50% 11/1/18 | 179,000 | 201,823 | |||||
*12.50% 11/1/19 | 5,319,000 | 5,757,817 | |||||
# | Multiplan 144A 9.875% 9/1/18 | 6,773,000 | 7,661,955 | ||||
# | Mylan 144A 6.00% 11/15/18 | 2,985,000 | 3,274,733 | ||||
* | Radnet Management 10.375% 4/1/18 | 2,696,000 | 2,898,200 | ||||
# | Sky Growth Acquisition 144A | ||||||
7.375% 10/15/20 | 81,000 | 86,873 | |||||
St. Jude Medical 3.25% 4/15/23 | 20,195,000 | 20,840,674 | |||||
# | STHI Holding 144A 8.00% 3/15/18 | 51,000 | 56,100 | ||||
Tenet Healthcare 8.00% 8/1/20 | 1,765,000 | 1,990,038 | |||||
# | Truven Health Analytics 144A 10.625% 6/1/20 | 21,000 | 24,150 | ||||
# | Valeant Pharmaceuticals International | ||||||
144A 6.375% 10/15/20 | 2,791,000 | 3,104,988 | |||||
85,134,812 | |||||||
Insurance – 2.37% | |||||||
American International Group | |||||||
6.40% 12/15/20 | 5,095,000 | 6,384,815 | |||||
•8.175% 5/15/58 | 1,778,000 | 2,413,635 | |||||
8.25% 8/15/18 | 15,305,000 | 19,891,754 |
32
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Insurance (continued) | |||||||
• | Chubb 6.375% 3/29/67 | USD | 13,273,000 | $ | 14,832,578 | ||
# | Highmark 144A | ||||||
4.75% 5/15/21 | 5,710,000 | 5,778,366 | |||||
6.125% 5/15/41 | 2,145,000 | 2,110,515 | |||||
# | Hub International 144A 8.125% 10/15/18 | 62,000 | 67,038 | ||||
*• | ING Groep 5.775% 12/29/49 | 6,320,000 | 6,162,000 | ||||
# | ING U.S. 144A | ||||||
2.90% 2/15/18 | 3,845,000 | 3,939,537 | |||||
5.50% 7/15/22 | 9,510,000 | 10,833,982 | |||||
# | Liberty Mutual Group 144A | ||||||
4.95% 5/1/22 | 10,020,000 | 11,173,743 | |||||
6.50% 5/1/42 | 11,465,000 | 13,535,212 | |||||
•7.00% 3/15/37 | 3,778,000 | 3,919,675 | |||||
MetLife | |||||||
6.40% 12/15/36 | 35,000 | 39,253 | |||||
6.817% 8/15/18 | 8,550,000 | 10,759,859 | |||||
# | MetLife Capital Trust X 144A | ||||||
9.25% 4/8/38 | 11,710,000 | 16,452,550 | |||||
# | Metropolitan Life Global Funding I 144A | ||||||
3.00% 1/10/23 | 9,860,000 | 10,068,125 | |||||
3.875% 4/11/22 | 2,760,000 | 3,011,411 | |||||
# | Onex USI Acquisition 144A 7.75% 1/15/21 | 54,000 | 55,890 | ||||
Prudential Financial | |||||||
3.875% 1/14/15 | 4,320,000 | 4,546,009 | |||||
4.50% 11/15/20 | 3,640,000 | 4,158,507 | |||||
4.50% 11/16/21 | 3,310,000 | 3,748,006 | |||||
•5.625% 6/15/43 | 4,800,000 | 5,052,000 | |||||
*•5.875% 9/15/42 | 4,295,000 | 4,652,000 | |||||
6.00% 12/1/17 | 7,845,000 | 9,392,246 | |||||
t#=‡ | Twin Reefs Pass Through Trust 144A | ||||||
0.00% 12/29/49 | 1,900,000 | 0 | |||||
WellPoint | |||||||
1.875% 1/15/18 | 455,000 | 462,848 | |||||
3.30% 1/15/23 | 19,850,000 | 20,515,292 | |||||
• | XL Group 6.50% 12/29/49 | 5,319,000 | 5,252,513 | ||||
•# | ZFS Finance USA Trust II 144A 6.45% 12/15/65 | 12,255,000 | 13,296,675 | ||||
212,506,034 |
33
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Natural Gas – 2.93% | |||||||
# | CNOOC Finance 2012 144A 3.875% 5/2/22 | USD | 15,220,000 | $ | 16,176,836 | ||
El Paso Pipeline Partners Operating | |||||||
6.50% 4/1/20 | 12,790,000 | 15,830,989 | |||||
• | Enbridge Energy Partners 8.05% 10/1/37 | 18,785,000 | 21,764,170 | ||||
Energy Transfer Partners 9.70% 3/15/19 | 8,635,000 | 11,796,325 | |||||
Enterprise Products Operating | |||||||
•7.034% 1/15/68 | 22,749,000 | 26,415,706 | |||||
•8.375% 8/1/66 | 1,492,000 | 1,715,172 | |||||
9.75% 1/31/14 | 3,046,000 | 3,252,220 | |||||
# | GDF Suez 144A 2.875% 10/10/22 | 10,385,000 | 10,538,137 | ||||
Kinder Morgan Energy Partners 9.00% 2/1/19 | 16,492,000 | 22,327,777 | |||||
NiSource Finance | |||||||
4.80% 2/15/44 | 5,780,000 | 5,970,971 | |||||
5.80% 2/1/42 | 10,475,000 | 12,216,427 | |||||
# | Pertamina Persero 144A | ||||||
*4.875% 5/3/22 | 7,910,000 | 8,434,433 | |||||
6.00% 5/3/42 | 6,745,000 | 7,270,436 | |||||
Plains All American Pipeline 8.75% 5/1/19 | 14,204,000 | 19,351,515 | |||||
Spectra Energy Capital 3.30% 3/15/23 | 6,510,000 | 6,644,646 | |||||
Statoil 2.45% 1/17/23 | 7,540,000 | 7,591,755 | |||||
Sunoco Logistics Partners Operations | |||||||
3.45% 1/15/23 | 20,130,000 | 20,405,922 | |||||
• | TransCanada Pipelines 6.35% 5/15/67 | 27,180,000 | 29,043,188 | ||||
Williams Partners 7.25% 2/1/17 | 13,298,000 | 15,989,183 | |||||
262,735,808 | |||||||
Real Estate – 1.87% | |||||||
Alexandria Real Estate Equities 4.60% 4/1/22 | 13,865,000 | 15,323,348 | |||||
Boston Properties 3.125% 9/1/23 | 7,825,000 | 7,957,540 | |||||
BRE Properties 3.375% 1/15/23 | 10,370,000 | 10,559,346 | |||||
Developers Diversified Realty | |||||||
4.625% 7/15/22 | 3,655,000 | 4,051,527 | |||||
4.75% 4/15/18 | 7,770,000 | 8,712,571 | |||||
7.50% 4/1/17 | 5,330,000 | 6,404,480 | |||||
7.875% 9/1/20 | 9,374,000 | 12,180,154 | |||||
9.625% 3/15/16 | 3,656,000 | 4,459,377 | |||||
Digital Realty Trust | |||||||
5.25% 3/15/21 | 16,343,000 | 18,656,123 | |||||
5.875% 2/1/20 | 7,425,000 | 8,694,556 |
34
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Real Estate (continued) | |||||||
Duke Realty 3.625% 4/15/23 | USD | 7,520,000 | $ | 7,671,062 | |||
National Retail Properties | |||||||
3.30% 4/15/23 | 7,105,000 | 7,122,898 | |||||
3.80% 10/15/22 | 2,200,000 | 2,313,476 | |||||
# | Qatari Diar Finance 144A 5.00% 7/21/20 | 7,392,000 | 8,508,192 | ||||
Regency Centers | |||||||
4.80% 4/15/21 | 9,255,000 | 10,481,352 | |||||
5.875% 6/15/17 | 2,168,000 | 2,498,069 | |||||
UDR 4.625% 1/10/22 | 9,500,000 | 10,718,508 | |||||
# | WEA Finance 144A 4.625% 5/10/21 | 10,480,000 | 11,885,483 | ||||
Weingarten Realty Investors 3.50% 4/15/23 | 8,665,000 | 8,851,081 | |||||
167,049,143 | |||||||
Services – 1.33% | |||||||
# | Algeco Scotsman Global Finance 144A | ||||||
*8.50% 10/15/18 | 3,265,000 | 3,542,525 | |||||
10.75% 10/15/19 | 6,826,000 | 6,979,584 | |||||
Ameristar Casinos 7.50% 4/15/21 | 5,515,000 | 6,176,799 | |||||
# | ARAMARK 144A 5.75% 3/15/20 | 1,520,000 | 1,599,800 | ||||
# | Avis Budget Car Rental 144A 5.50% 4/1/23 | 4,630,000 | 4,797,838 | ||||
*# | Beazer Homes USA 144A 7.25% 2/1/23 | 5,000 | 5,250 | ||||
Caesars Entertainment Operating | |||||||
8.50% 2/15/20 | 212,000 | 205,243 | |||||
11.25% 6/1/17 | 2,161,000 | 2,296,063 | |||||
CityCenter Holdings PIK 10.75% 1/15/17 | 27,000 | 30,004 | |||||
# | DigitalGlobe 144A 5.25% 2/1/21 | 1,570,000 | 1,591,588 | ||||
FTI Consulting 6.75% 10/1/20 | 3,665,000 | 4,008,594 | |||||
Geo Group | |||||||
#144A 5.125% 4/1/23 | 925,000 | 960,844 | |||||
6.625% 2/15/21 | 4,087,000 | 4,546,788 | |||||
# | H&E Equipment Services 144A 7.00% 9/1/22 | 5,223,000 | 5,810,588 | ||||
Iron Mountain | |||||||
7.75% 10/1/19 | 1,550,000 | 1,759,250 | |||||
8.00% 6/15/20 | 2,163,000 | 2,273,854 | |||||
Kansas City Southern de Mexico | |||||||
6.125% 6/15/21 | 88,000 | 103,796 | |||||
M/I Homes 8.625% 11/15/18 | 4,618,000 | 5,149,070 | |||||
# | Mattamy Group 144A 6.50% 11/15/20 | 53,000 | 52,603 | ||||
Meritage Homes 7.00% 4/1/22 | 10,000 | 11,325 |
35
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Services (continued) | |||||||
MGM Resorts International | |||||||
#144A 6.75% 10/1/20 | USD | 1,000,000 | $ | 1,100,000 | |||
*7.75% 3/15/22 | 137,000 | 157,208 | |||||
11.375% 3/1/18 | 11,732,000 | 15,222,269 | |||||
NCL 9.50% 11/15/18 | 9,000 | 10,238 | |||||
* | PHH | ||||||
7.375% 9/1/19 | 3,293,000 | 3,778,718 | |||||
9.25% 3/1/16 | 7,798,000 | 9,182,144 | |||||
Pinnacle Entertainment | |||||||
7.75% 4/1/22 | 88,000 | 96,800 | |||||
*8.75% 5/15/20 | 2,611,000 | 2,904,738 | |||||
Royal Caribbean Cruises | |||||||
5.25% 11/15/22 | 20,000 | 20,800 | |||||
7.00% 6/15/13 | 4,625,000 | 4,653,906 | |||||
Ryland Group 8.40% 5/15/17 | 4,694,000 | 5,644,535 | |||||
Seven Seas Cruises 9.125% 5/15/19 | 52,000 | 57,135 | |||||
Standard Pacific 10.75% 9/15/16 | 4,678,000 | 5,859,194 | |||||
Swift Services Holdings 10.00% 11/15/18 | 51,000 | 58,650 | |||||
# | Taylor Morrison Communities 144A | ||||||
7.75% 4/15/20 | 37,000 | 41,718 | |||||
United Rentals North America | |||||||
5.75% 7/15/18 | 30,000 | 32,850 | |||||
6.125% 6/15/23 | 10,000 | 10,825 | |||||
7.625% 4/15/22 | 63,000 | 72,608 | |||||
8.25% 2/1/21 | 192,000 | 219,840 | |||||
10.25% 11/15/19 | 6,046,000 | 7,028,474 | |||||
West 7.875% 1/15/19 | 6,570,000 | 7,194,149 | |||||
Wynn Las Vegas 7.75% 8/15/20 | 3,205,000 | 3,685,750 | |||||
118,933,955 | |||||||
Technology – 1.90% | |||||||
Amkor Technology 7.375% 5/1/18 | 1,340,000 | 1,432,125 | |||||
Apple 2.40% 5/3/23 | 12,175,000 | 12,158,807 | |||||
# | Avaya 144A | ||||||
7.00% 4/1/19 | 3,081,000 | 2,980,868 | |||||
10.50% 3/1/21 | 5,013,000 | 4,649,558 | |||||
Baidu 3.50% 11/28/22 | 16,765,000 | 16,950,387 | |||||
CDW | |||||||
8.50% 4/1/19 | 31,000 | 34,914 | |||||
12.535% 10/12/17 | 2,877,000 | 3,107,160 |
36
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Technology (continued) | |||||||
Fidelity National Information Services | |||||||
3.50% 4/15/23 | USD | 10,015,000 | $ | 10,151,504 | |||
First Data | |||||||
#144A 8.25% 1/15/21 | 52,000 | 55,510 | |||||
#144A 11.25% 1/15/21 | 3,125,000 | 3,281,250 | |||||
*11.25% 3/31/16 | 3,589,000 | 3,669,753 | |||||
GXS Worldwide 9.75% 6/15/15 | 10,122,000 | 10,476,270 | |||||
* | iGATE 9.00% 5/1/16 | 54,000 | 59,130 | ||||
Infor U.S. 9.375% 4/1/19 | 1,549,000 | 1,773,605 | |||||
j2 Global 8.00% 8/1/20 | 82,000 | 88,970 | |||||
Jabil Circuit 7.75% 7/15/16 | 1,178,000 | 1,369,425 | |||||
MagnaChip Semiconductor 10.50% 4/15/18 | 280,000 | 315,000 | |||||
Microsoft 2.125% 11/15/22 | 6,000,000 | 5,925,774 | |||||
National Semiconductor 6.60% 6/15/17 | 24,882,000 | 30,203,438 | |||||
NetApp | |||||||
2.00% 12/15/17 | 6,205,000 | 6,258,866 | |||||
3.25% 12/15/22 | 7,650,000 | 7,649,816 | |||||
Oracle 5.75% 4/15/18 | 1,073,000 | 1,299,865 | |||||
# | Samsung Electronics America 144A | ||||||
1.75% 4/10/17 | 11,685,000 | 11,889,254 | |||||
Symantec 4.20% 9/15/20 | 9,630,000 | 10,454,742 | |||||
*# | Tencent Holdings 144A 3.375% 3/5/18 | 10,265,000 | 10,722,172 | ||||
# | Viasystems 144A 7.875% 5/1/19 | 56,000 | 60,060 | ||||
Xerox 6.35% 5/15/18 | 11,243,000 | 13,305,596 | |||||
170,323,819 | |||||||
Transportation – 0.88% | |||||||
# | Brambles USA 144A | ||||||
3.95% 4/1/15 | 20,145,000 | 21,018,346 | |||||
5.35% 4/1/20 | 7,310,000 | 8,302,566 | |||||
# | ERAC USA Finance 144A 5.25% 10/1/20 | 30,240,000 | 35,520,419 | ||||
FedEx 4.10% 4/15/43 | 7,820,000 | 7,823,816 | |||||
# | Kansas City Southern de Mexico 144A | ||||||
2.35% 5/15/20 | 2,745,000 | 2,761,517 | |||||
3.00% 5/15/23 | 3,050,000 | 3,065,500 | |||||
78,492,164 |
37
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Utilities – 0.31% | |||||||
AES | |||||||
4.875% 5/15/23 | USD | 2,625,000 | $ | 2,684,063 | |||
7.375% 7/1/21 | 1,562,000 | 1,866,590 | |||||
8.00% 6/1/20 | 2,448,000 | 2,980,440 | |||||
# | Calpine 144A 7.875% 7/31/20 | 3,783,000 | 4,303,162 | ||||
Elwood Energy 8.159% 7/5/26 | 2,609,069 | 2,729,739 | |||||
GenOn Energy 9.875% 10/15/20 | 4,169,000 | 4,836,039 | |||||
* | Mirant Americas Generation 8.50% 10/1/21 | 2,303,000 | 2,740,570 | ||||
NRG Energy | |||||||
7.625% 1/15/18 | 925,000 | 1,076,469 | |||||
7.875% 5/15/21 | 3,694,000 | 4,201,925 | |||||
27,418,997 | |||||||
Total Corporate Bonds (cost $4,243,892,522) | 4,567,683,057 | ||||||
Municipal Bond – 0.00% | |||||||
Oregon State Taxable Pension | |||||||
5.892% 6/1/27 | 305,000 | 395,124 | |||||
Total Municipal Bond (cost $305,000) | 395,124 | ||||||
Non-Agency Asset-Backed Securities – 1.50% | |||||||
• | Ally Master Owner Trust | ||||||
Series 2011-1 A1 1.069% 1/15/16 | 9,350,000 | 9,391,795 | |||||
Series 2013-2 A 0.649% 4/15/18 | 5,000,000 | 5,000,010 | |||||
Ameriquest Mortgage Securities | |||||||
Series 2003-8 AF4 5.82% 10/25/33 | 65,676 | 66,599 | |||||
#Avis Budget Rental Car Funding AESOP | |||||||
Series 2011-2A A 144A 2.37% 11/20/14 | 5,455,000 | 5,577,039 | |||||
Capital One Multi-Asset Execution Trust | |||||||
•Series 2007-A1 A1 0.249% 11/15/19 | 1,500,000 | 1,489,899 | |||||
Series 2007-A7 A7 5.75% 7/15/20 | 20,500,000 | 24,655,985 | |||||
CenterPoint Energy Transition Bond | |||||||
Series 2012-1 A2 2.161% 10/15/21 | 10,535,000 | 11,004,145 | |||||
Citibank Credit Card Issuance Trust | |||||||
Series 2007-A3 A3 6.15% 6/15/39 | 3,938,000 | 5,185,523 |
38
Principal amount° | Value (U.S. $) | ||||||
Non-Agency Asset-Backed Securities (continued) | |||||||
Citicorp Residential Mortgage Securities | |||||||
Series 2006-3 A4 5.703% 11/25/36 | USD | 4,504,335 | $ | 4,493,803 | |||
Series 2006-3 A5 5.948% 11/25/36 | 5,800,000 | 5,606,843 | |||||
Citifinancial Mortgage Securities | |||||||
Series 2003-2 AF4 4.598% 5/25/33 | 253,832 | 251,806 | |||||
Contimortgage Home Equity Trust | |||||||
Series 1996-4 A8 7.22% 1/15/28 | 5,828 | 5,151 | |||||
• | Countrywide Asset-Backed Certificates | ||||||
Series 2006-13 1AF3 5.286% 1/25/37 | 24,422 | 23,364 | |||||
Discover Card Master Trust | |||||||
Series 2012-A1 A1 0.81% 8/15/17 | 10,010,000 | 10,072,933 | |||||
# | Enterprise Fleet Financing | ||||||
Series 2012-1 A2 144A 1.14% 11/20/17 | 1,869,711 | 1,878,082 | |||||
# | FRS Series 2013-1A A1 144A 1.80% 4/15/43 | 2,865,000 | 2,877,188 | ||||
GE Capital Credit Card Master Note Trust | |||||||
Series 2012-2A 2.22% 1/15/22 | 4,945,000 | 5,163,218 | |||||
Series 2012-6A 1.36% 8/17/20 | 15,630,000 | 15,804,259 | |||||
# | Golden Credit Card Trust | ||||||
Series 2012-5A A 144A 0.79% 9/15/17 | 4,440,000 | 4,458,834 | |||||
# | Great America Leasing Receivables | ||||||
Series 2013-1 B 144A 1.44% 5/15/18 | 945,000 | 951,160 | |||||
#• | MASTR Specialized Loan Trust | ||||||
Series 2005-2 A2 144A 5.006% 7/25/35 | 307,108 | 310,721 | |||||
Mid-State Trust XI | |||||||
Series 11 A1 4.864% 7/15/38 | 376,241 | 402,157 | |||||
• | RASC Trust | ||||||
Series 2006-EMX1 A2 0.43% 1/25/36 | 2,053,667 | 1,978,825 | |||||
Series 2006-KS3 AI3 0.37% 4/25/36 | 27,404 | 26,655 | |||||
# | TAL Advantage V | ||||||
Series 2013-1A A 144A 2.83% 2/22/38 | 5,369,000 | 5,386,063 | |||||
#• | Trafigura Securitisation Finance | ||||||
Series 2012-1A A 144A 2.599% 10/15/15 | 6,960,000 | 7,095,938 | |||||
# | Trinity Rail Leasing | ||||||
Series 2012-1A A1 144A 2.266% 1/15/43 | 5,047,965 | 5,106,132 | |||||
Total Non-Agency Asset-Backed Securities | |||||||
(cost $129,895,497) | 134,264,127 |
39
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Non-Agency Collateralized Mortgage Obligations – 0.37% | ||||||||
• | American Home Mortgage Investment Trust | |||||||
Series 2005-2 5A1 5.064% 9/25/35 | USD | 1,032,804 | $ | 1,056,294 | ||||
Bank of America Alternative Loan Trust | ||||||||
Series 2005-1 2A1 5.50% 2/25/20 | 360,734 | 366,878 | ||||||
Series 2005-3 2A1 5.50% 4/25/20 | 322,080 | 337,142 | ||||||
Series 2005-6 7A1 5.50% 7/25/20 | 1,198,849 | 1,246,899 | ||||||
• | Bank of America Mortgage Securities | |||||||
Series 2003-E 2A2 3.135% 6/25/33 | 125,589 | 126,720 | ||||||
Series 2005-I 2A2 3.105% 10/25/35 | 4,585 | 124 | ||||||
• | Chase Mortgage Finance | |||||||
Series 2005-A1 3A1 2.912% 12/25/35 | 909,921 | 848,761 | ||||||
• | ChaseFlex Trust | |||||||
Series 2006-1 A4 5.508% 6/25/36 | 6,119,000 | 5,414,753 | ||||||
Citicorp Mortgage Securities Trust | ||||||||
Series 2006-3 1A9 5.75% 6/25/36 | 944,182 | 966,417 | ||||||
• | Citigroup Mortgage Loan Trust | |||||||
Series 2004-UST1 A6 4.464% 8/25/34 | 549,114 | 553,146 | ||||||
Countrywide Alternative Loan Trust | ||||||||
Series 2005-57CB 4A3 5.50% 12/25/35 | 506,349 | 427,093 | ||||||
•w | Countrywide Home Loan Mortgage | |||||||
Pass Through Trust | ||||||||
Series 2003-21 A1 3.054% 5/25/33 | 47,340 | 47,434 | ||||||
Series 2004-HYB2 2A 2.805% 7/20/34 | 154,354 | 139,042 | ||||||
Series 2004-HYB5 3A1 2.996% 4/20/35 | 168,703 | 149,375 | ||||||
w | First Horizon Mortgage Pass Through Trust | |||||||
Series 2004-5 2A1 6.25% 8/25/17 | 24,935 | 25,693 | ||||||
#• | GSMPS Mortgage Loan Trust | |||||||
Series 1998-3 A 144A 7.75% 9/19/27 | 66,943 | 70,752 | ||||||
• | GSR Mortgage Loan Trust | |||||||
Series 2004-9 4A1 2.687% 8/25/34 | 138,945 | 141,891 | ||||||
Series 2006-AR1 3A1 3.187% 1/25/36 | 824,017 | 733,746 | ||||||
• | JPMorgan Mortgage Trust | |||||||
Series 2005-A2 5A1 4.227% 4/25/35 | 11,016 | 11,035 | ||||||
Series 2005-A8 1A1 5.207% 11/25/35 | 631,351 | 614,901 | ||||||
Series 2006-A2 3A3 5.316% 4/25/36 | 2,007,397 | 1,810,995 | ||||||
Series 2007-A1 7A4 3.00% 7/25/35 | 151,670 | 71,839 |
40
Principal amount° | Value (U.S. $) | ||||||
Non-Agency Collateralized Mortgage Obligations (continued) | |||||||
• | MASTR ARM Trust | ||||||
Series 2003-6 1A2 2.825% 12/25/33 | USD | 59,485 | $ | 59,322 | |||
Series 2004-10 2A2 3.133% 10/25/34 | 66,716 | 29,755 | |||||
Series 2005-6 7A1 5.301% 6/25/35 | 1,281,193 | 1,253,068 | |||||
Series 2005-7 2A2 2.553% 9/25/35 | 2,664 | 64 | |||||
Series 2006-2 4A1 2.649% 2/25/36 | 275,009 | 257,508 | |||||
w | Washington Mutual Alternative Mortgage | ||||||
Pass Through Certificates | |||||||
Series 2005-1 5A2 6.00% 3/25/35 | 417,390 | 149,046 | |||||
w | Washington Mutual Mortgage Pass | ||||||
Through Certificates | |||||||
Series 2003-S10 A2 5.00% 10/25/18 | 379,337 | 391,167 | |||||
•Series 2006-AR14 2A1 4.845% 11/25/36 | 5,600,990 | 4,966,001 | |||||
Wells Fargo Mortgage-Backed | |||||||
Securities Trust | |||||||
Series 2005-18 1A1 5.50% 1/25/36 | 1,042,756 | 1,045,896 | |||||
Series 2006-2 3A1 5.75% 3/25/36 | 3,758,891 | 3,796,156 | |||||
Series 2006-3 A11 5.50% 3/25/36 | 3,156,078 | 3,370,758 | |||||
•Series 2006-AR5 2A1 2.639% 4/25/36 | 2,584,707 | 2,399,880 | |||||
Series 2007-8 2A6 6.00% 7/25/37 | 256,658 | 251,075 | |||||
Series 2007-14 1A1 6.00% 10/25/37 | 217,781 | 225,088 | |||||
Total Non-Agency Collateralized Mortgage | |||||||
Obligations (cost $28,890,346) | 33,355,714 | ||||||
ΔRegional Bonds – 1.69% | |||||||
Australia – 1.22% | |||||||
New South Wales Treasury | |||||||
3.75% 11/20/20 | AUD | 8,647,000 | 11,751,772 | ||||
6.00% 3/1/22 | AUD | 37,815,000 | 45,516,109 | ||||
Queensland Treasury 4.25% 7/21/23 | AUD | 7,269,000 | 7,485,855 | ||||
Victoria Treasury 6.00% 10/17/22 | AUD | 36,593,000 | 44,360,039 | ||||
109,113,775 | |||||||
Canada – 0.47% | |||||||
Province of Manitoba 2.10% 9/6/22 | USD | 17,805,000 | 17,922,940 | ||||
Province of Quebec 2.625% 2/13/23 | 23,460,000 | 23,973,657 | |||||
41,896,597 | |||||||
Total Regional Bonds (cost $150,493,686) | 151,010,372 |
41
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||
«Senior Secured Loans – 7.15% | |||||||
ABC Supply Tranche B 1st Lien 2.75% 4/5/20 | USD | 3,945,000 | $ | 3,981,558 | |||
Air Medical Group Holdings | |||||||
Tranche B1 1st Lien 5.25% 5/26/18 | 2,478,788 | 2,543,856 | |||||
Albertsons 1st Lien 4.50% 2/14/16 | 6,785,000 | 6,878,823 | |||||
Alcatel-Lucent USA | |||||||
Tranche B 1st Lien 5.25% 6/4/16 | 700,000 | 712,542 | |||||
Tranche C 1st Lien 6.25% 12/4/18 | 5,299,250 | 5,441,667 | |||||
Allied Security Holdings | |||||||
Tranche 2L 8.25% 1/21/18 | 2,715,000 | 2,745,544 | |||||
ARAMARK Tranche D 3.00% 9/30/19 | 2,250,000 | 2,282,803 | |||||
ATI Holdings Tranche B 4.50% 1/31/20 | 3,152,100 | 3,205,292 | |||||
Avaya | |||||||
Tranche B-3 4.50% 10/27/17 | 3,418,231 | 3,198,449 | |||||
Tranche B5 6.75% 3/31/18 | 4,352,466 | 4,361,171 | |||||
Avis Budget Car Rental | |||||||
Tranche B 1st Lien 2.75% 3/15/19 | 1,425,000 | 1,447,266 | |||||
Bausch & Lomb | |||||||
3.75% 6/27/15 | 1,469,318 | 1,484,929 | |||||
Tranche B 4.25% 4/17/19 | 8,356,850 | 8,426,053 | |||||
Biomet Tranche B 3.75% 7/25/17 | 3,452,650 | 3,502,282 | |||||
BJ’S Wholesale Club 2nd Lien 8.50% 3/29/19 | 9,940,000 | 10,353,136 | |||||
Blackboard Tranche B2 4.75% 10/4/18 | 8,490,683 | 8,660,496 | |||||
Bombardier Recreational Products | |||||||
1st Lien 3.75% 1/17/19 | 7,020,000 | 7,103,363 | |||||
Bresnan Broadband Holdings 3.22% 12/14/17 | 7,563,013 | 7,614,064 | |||||
Brickman Group Holdings | |||||||
Tranche B1 4.25% 10/14/16 | 5,005,988 | 5,068,563 | |||||
Burlington Coat Factory Warehouse | |||||||
4.25% 5/1/17 | 12,018,067 | 12,195,272 | |||||
Caesars Entertainment Operating | |||||||
Tranche B 7.50% 10/31/16 | 11,191,800 | 11,426,101 | |||||
Tranche B6 5.25% 1/28/18 | 10,940,855 | 9,958,454 | |||||
Catalent Pharma Solutions 6.50% 12/31/17 | 660,000 | 668,663 | |||||
Cemex 1st Lien 5.25% 2/14/17 | 5,520,000 | 5,464,800 | |||||
Chrysler Group Tranche B 4.75% 5/24/17 | 18,264,386 | 18,573,766 | |||||
Clear Channel Communication | |||||||
Tranche B 3.65% 1/29/16 | 3,034,940 | 2,788,351 | |||||
Community Health Systems 3.50% 1/25/17 | 5,270,000 | 5,329,272 | |||||
Compass Investors | |||||||
Tranche B 4.00% 12/14/19 | 9,002,438 | 9,129,975 |
42
Principal amount° | Value (U.S. $) | ||||||
«Senior Secured Loans (continued) | |||||||
Crown Castle Operating | |||||||
Tranche B 2.50% 1/31/19 | USD | 5,546,914 | $ | 5,580,717 | |||
David’s Bridal Tranche B 3.75% 9/25/19 | 2,144,625 | 2,178,122 | |||||
DaVita HealthCare Partners | |||||||
Tranche B 3.00% 10/20/16 | 6,711,342 | 6,751,831 | |||||
Tranche B2 3.00% 8/1/19 | 4,882,763 | 4,945,818 | |||||
Delos Aircraft 3.75% 3/17/16 | 4,880,000 | 4,928,800 | |||||
Delta Air Lines | |||||||
Tranche B 1st Lien 3.25% 4/15/17 | 10,430,200 | 10,591,003 | |||||
Deltek | |||||||
10.00% 8/28/17 | 360,000 | 367,988 | |||||
1st Lien 3.75% 10/10/18 | 2,463,825 | 2,493,083 | |||||
Dynegy | |||||||
Tranche B1 1st Lien 3.00% 4/16/20 | 759,615 | 761,230 | |||||
Tranche B2 3.00% 4/16/20 | 1,215,385 | 1,217,967 | |||||
Edward Cayman Island II | |||||||
1st Lien 3.50% 3/5/20 | 819,553 | 824,163 | |||||
Emdeon | |||||||
Tranche B 3.75% 11/2/18 | 6,117,717 | 6,201,071 | |||||
1st Lien 3.75% 11/2/18 | 1,325,000 | 1,340,044 | |||||
Equipower Resources Holdings | |||||||
Tranche B 4.25% 12/21/18 | 2,021,950 | 2,059,231 | |||||
2nd Lien 8.50% 5/23/19 | 3,660,000 | 3,769,800 | |||||
Essar Steel Algoma 8.75% 9/12/14 | 4,454,470 | 4,552,838 | |||||
First Data 1st Lien 4.00% 4/5/17 | 13,597,445 | 13,593,201 | |||||
Flying Fortress 1st Lien 5.00% 6/30/17 | 1,470,251 | 1,484,954 | |||||
Generac Power Systems Tranche B | |||||||
5.00% 5/30/18 | 3,606,322 | 3,678,449 | |||||
Getty Images Tranche B 3.50% 9/19/19 | 7,356,563 | 7,472,656 | |||||
Gray Television 3.75% 10/11/19 | 11,598,694 | 11,772,674 | |||||
Harrah’s Las Vegas Propco 3.50% 2/13/15 | 3,655,000 | 3,363,744 | |||||
HCA | |||||||
Tranche B3 2.75% 5/1/18 | 250,000 | 250,839 | |||||
Tranche B4 2.75% 5/1/18 | 1,550,000 | 1,555,813 | |||||
HD Supply Tranche B 3.25% 10/12/17 | 7,462,978 | 7,569,094 | |||||
Hologic Tranche B 3.50% 4/29/19 | 6,892,913 | 6,994,438 | |||||
Hostess Brands 1st Lien 5.50% 3/12/20 | 5,645,000 | 5,796,709 | |||||
Houghton International | |||||||
1st Lien 4.00% 11/20/19 | 1,915,200 | 1,947,121 | |||||
2nd Lien 8.25% 11/20/20 | 2,610,000 | 2,675,250 |
43
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
«Senior Secured Loans (continued) | ||||||||
IASIS Healthcare Tranche B 3.25% 5/3/18 | USD | 8,177,092 | $ | 8,303,584 | ||||
Immucor Tranche B2 3.75% 8/19/18 | 10,916,424 | 11,042,650 | ||||||
Ineos US Finance 5.25% 5/4/18 | 4,206,925 | 4,267,400 | ||||||
Infor US Tranche B2 4.00% 4/5/18 | 4,446,456 | 4,526,105 | ||||||
Intelsat Jackson Holdings | ||||||||
Tranche B1 3.25% 4/2/18 | 12,252,182 | 12,446,170 | ||||||
Landry’s Tranche B 3.50% 4/24/18 | 7,787,109 | 7,908,782 | ||||||
Level 3 Financing | ||||||||
Tranche B 1st Lien 3.25% 8/1/19 | 10,210,000 | 10,342,944 | ||||||
LTS Buyer | ||||||||
1st Lien 3.50% 3/15/20 | 1,330,000 | 1,346,060 | ||||||
2nd Lien 8.00% 3/15/21 | 3,985,000 | 4,084,625 | ||||||
MGM Resorts International | ||||||||
Tranche B 3.25% 12/13/19 | 5,032,388 | 5,118,009 | ||||||
Michael Stores | ||||||||
Tranche B 1st Lien 2.75% 1/16/20 | 3,345,000 | 3,382,033 | ||||||
@ | Midstates Petroleum 9.00% 4/4/14 | 3,885,000 | 3,885,000 | |||||
Mission Broadcasting | ||||||||
Tranche B 1st Lien 3.50% 12/3/19 | 423,429 | 431,368 | ||||||
MultipPlan Tranche B 3.00% 8/18/17 | 6,059,526 | 6,137,797 | ||||||
National Cinemedia 3.25% 11/26/19 | 1,424,000 | 1,434,680 | ||||||
NEP Broadcasting 2nd Lien 8.25% 7/3/20 | 4,722,857 | 4,939,320 | ||||||
Nexstar Broadcasting | ||||||||
Tranche B 3.50% 7/19/19 | 1,001,571 | 1,020,351 | ||||||
Novelis Tranche B 2.75% 3/10/17 | 361,076 | 367,395 | ||||||
Nuveen Investments | ||||||||
7.00% 3/1/19 | 15,789,000 | 16,163,988 | ||||||
2nd Lien 6.50% 2/28/19 | 8,465,000 | 8,577,864 | ||||||
Tranche B 5.00% 5/15/17 | 10,578,365 | 10,701,783 | ||||||
NXP BV Tranche C 3.50% 12/4/20 | 1,421,438 | 1,458,157 | ||||||
Offshore Group Investments | ||||||||
Tranche B 5.00% 10/17/17 | 5,001,750 | 5,076,776 | ||||||
OSI Restaurants | ||||||||
Tranche B 1st Lien 2.50% 10/26/19 | 5,772,000 | 5,812,883 | ||||||
Panda Temple Power II | ||||||||
Tranche B 1st Lien 7.25% 3/28/19 | 6,861,000 | 6,998,220 | ||||||
Par Pharmaceutical | ||||||||
Tranche B 1st Lien 3.25% 9/28/19 | 3,137,138 | 3,169,629 | ||||||
Peninsula Gaming Tranche B 4.50% 5/16/17 | 4,129,650 | 4,198,479 |
44
Principal amount° | Value (U.S. $) | |||||||
«Senior Secured Loans (continued) | ||||||||
Pharmaceutical Product Development | ||||||||
3.25% 12/5/18 | USD | 4,069,800 | $ | 4,134,331 | ||||
PQ Tranche B 4.50% 8/7/17 | 5,642,125 | 5,715,676 | ||||||
PVH Tranche B 2.50% 12/19/19 | 6,305,000 | 6,368,838 | ||||||
Ranpak 2nd Lien 8.50% 4/10/20 | 3,970,000 | 4,089,100 | ||||||
Remy International | ||||||||
Tranche B 1st Lien 3.00% 3/5/20 | 3,325,398 | 3,337,869 | ||||||
Reynolds Group Holdings | ||||||||
1st Lien 3.75% 9/21/18 | 8,650,600 | 8,808,940 | ||||||
RGIS Services 4.25% 5/3/17 | 5,225,885 | 5,307,539 | ||||||
Rite Aid 2nd Lien 4.75% 8/3/20 | 7,110,000 | 7,391,435 | ||||||
Samson Investment 2nd Lien 4.75% 9/10/18 | 6,195,000 | 6,276,309 | ||||||
Sensus USA 2nd Lien 7.25% 4/13/18 | 6,235,000 | 6,297,350 | ||||||
Seven Seas Cruises 1st Lien 3.50% 12/21/18 | 5,016,500 | 5,091,748 | ||||||
Smart & Final | ||||||||
1st Lien 4.50% 11/8/19 | 5,757,570 | 5,851,131 | ||||||
2nd Lien 9.25% 11/8/20 | 7,705,000 | 8,009,987 | ||||||
Sophia Tranche B 1st Lien 3.25% 1/29/18 | 2,020,656 | 2,050,335 | ||||||
SourceHOV | ||||||||
1st Lien 5.25% 4/30/18 | 2,625,000 | 2,611,875 | ||||||
2nd Lien 8.75% 4/30/19 | 325,000 | 321,750 | ||||||
Sprouts Farmers 3.50% 4/12/20 | 4,620,000 | 4,645,988 | ||||||
Station Casino Tranche B 4.00% 2/13/20 | 3,925,000 | 3,982,238 | ||||||
Sungard Data Systems | ||||||||
1st Lien 3.50% 12/4/19 | 1,007,475 | 1,023,054 | ||||||
Supervalu 1st Lien 6.25% 1/10/19 | 7,335,000 | 7,457,252 | ||||||
Surgery Center Holdings | ||||||||
4.75% 4/11/19 | 3,305,000 | 3,329,788 | ||||||
2nd Lien 8.50% 4/11/20 | 1,320,000 | 1,326,600 | ||||||
Swift Transportation | ||||||||
Tranche B2 1st Lien 3.00% 12/21/17 | 3,436,944 | 3,499,238 | ||||||
Taminco Global Chemical | ||||||||
Tranche B 3.25% 2/15/19 | 3,680,562 | 3,728,870 | ||||||
Tempur-Pedic International | ||||||||
Tranche B 4.00% 9/27/19 | 4,971,540 | 5,060,098 | ||||||
TI Group Automotive Systems | ||||||||
Tranche B 4.25% 3/14/19 | 2,665,000 | 2,711,638 | ||||||
Topaz Power Holdings 4.00% 2/4/20 | 5,406,450 | 5,467,273 | ||||||
Truven Health Tranche B 5.75% 5/23/19 | 6,250,611 | 6,348,277 |
45
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
«Senior Secured Loans (continued) | ||||||||
United Airlines | ||||||||
Tranche B 1st Lien 3.00% 3/12/19 | USD | 3,105,000 | $ | 3,145,735 | ||||
Univision Communications | ||||||||
Tranche C1 1st Lien 3.50% 2/22/20 | 4,921,337 | 4,977,126 | ||||||
Tranche C2 3.50% 2/6/20 | 12,755,000 | 12,897,358 | ||||||
U.S. Coatings Acquisition | ||||||||
Tranche B 3.50% 2/1/20 | 4,865,000 | 4,933,922 | ||||||
U.S. TelePacific 4.50% 2/10/17 | 4,285,128 | 4,290,484 | ||||||
Visant 4.00% 12/22/16 | 2,788,818 | 2,717,790 | ||||||
Warner Chilcott | ||||||||
Tranche B1 3.25% 3/15/18 | 2,072,938 | 2,106,871 | ||||||
Tranche B2 3.25% 3/15/18 | 1,846,768 | 1,877,000 | ||||||
Tranche B3 3.25% 3/15/18 | 1,138,083 | 1,156,714 | ||||||
Wide Open West Finance 3.75% 3/27/19 | 12,915,000 | 13,109,873 | ||||||
Yankee Cable Acquisition 4.00% 2/13/20 | 3,070,000 | 3,126,605 | ||||||
Yankee Candle 4.00% 3/2/19 | 1,620,142 | 1,634,926 | ||||||
Zayo Group | ||||||||
Tranche B 1st Lien 3.50% 7/2/19 | 9,707,098 | 9,832,989 | ||||||
Total Senior Secured Loans | ||||||||
(cost $630,263,304) | 640,459,131 | |||||||
ΔSovereign Bonds – 8.33% | ||||||||
Australia – 0.13% | ||||||||
Australia Government Bond | ||||||||
4.00% 8/20/20 | AUD | 5,834,000 | 11,726,216 | |||||
11,726,216 | ||||||||
Brazil – 0.36% | ||||||||
Brazil Government International Bond | ||||||||
5.625% 1/7/41 | USD | 6,624,000 | 8,336,304 | |||||
Brazil Notas do Tesouro Nacional | ||||||||
Series F 10.00% 1/1/17 | BRL | 45,356,000 | 23,434,046 | |||||
31,770,350 | ||||||||
Colombia – 0.43% | ||||||||
Colombia Government International Bond | ||||||||
4.375% 3/21/23 | COP | 37,448,000,000 | 20,824,222 | |||||
6.125% 1/18/41 | USD | 13,155,000 | 17,759,250 | |||||
38,583,472 |
46
Principal amount° | Value (U.S. $) | |||||||
ΔSovereign Bonds (continued) | ||||||||
Finland – 0.17% | ||||||||
Finland Government Bond 4.00% 7/4/25 | EUR | 9,289,000 | $ | 15,305,675 | ||||
15,305,675 | ||||||||
Indonesia – 1.08% | ||||||||
Indonesia Treasury Bond | ||||||||
5.625% 5/15/23 | IDR | 202,065,000,000 | 21,064,515 | |||||
7.00% 5/15/22 | IDR | 194,170,000,000 | 22,220,717 | |||||
7.00% 5/15/27 | IDR | 168,506,000,000 | 18,799,186 | |||||
# | Indonesian Government | |||||||
International Bond 144A | ||||||||
3.375% 4/15/23 | USD | 10,812,000 | 11,068,785 | |||||
4.625% 4/15/43 | 7,913,000 | 8,209,738 | ||||||
5.25% 1/17/42 | 13,143,000 | 14,917,305 | ||||||
96,280,246 | ||||||||
Ireland – 0.19% | ||||||||
# | Vnesheconombank 144A 6.025% 7/5/22 | 14,995,000 | 17,075,556 | |||||
17,075,556 | ||||||||
Malaysia – 0.06% | ||||||||
Malaysia Government Bond | ||||||||
4.262% 9/15/16 | MYR | 15,658,000 | 5,353,893 | |||||
5,353,893 | ||||||||
Mexico – 1.10% | ||||||||
Mexican Bonos | ||||||||
6.00% 6/18/15 | MXN | 54,212,200 | 4,659,087 | |||||
6.50% 6/10/21 | MXN | 71,091,100 | 6,705,071 | |||||
6.50% 6/9/22 | MXN | 75,281,000 | 7,157,532 | |||||
7.50% 6/3/27 | MXN | 373,567,000 | 39,343,638 | |||||
7.75% 5/29/31 | MXN | 286,174,000 | 31,133,573 | |||||
8.00%12/17/15 | MXN | 101,530,500 | 9,186,751 | |||||
98,185,652 | ||||||||
Nigeria – 0.06% | ||||||||
Nigeria Government Bond | ||||||||
15.10% 4/27/17 | NGN | 718,750,000 | 5,026,701 | |||||
5,026,701 |
47
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
ΔSovereign Bonds (continued) | ||||||||
Panama – 0.25% | ||||||||
Panama Government International Bond | ||||||||
6.70% 1/26/36 | USD | 4,581,000 | $ | 6,397,367 | ||||
7.125% 1/29/26 | 5,600,000 | 7,812,000 | ||||||
8.875% 9/30/27 | 5,330,000 | 8,559,980 | ||||||
22,769,347 | ||||||||
Paraguay – 0.06% | ||||||||
# | Republic of Paraguay 144A | |||||||
4.625% 1/25/23 | 5,640,000 | 5,781,000 | ||||||
5,781,000 | ||||||||
Peru – 0.33% | ||||||||
Peruvian Government International Bond | ||||||||
5.625% 11/18/50 | 4,410,000 | 5,677,875 | ||||||
7.125% 3/30/19 | 18,619,000 | 24,251,248 | ||||||
29,929,123 | ||||||||
Philippines – 0.13% | ||||||||
* | Philippine Government International Bond | |||||||
5.00% 1/13/37 | 9,940,000 | 12,039,825 | ||||||
12,039,825 | ||||||||
Poland – 0.95% | ||||||||
Poland Government Bond | ||||||||
4.00% 10/25/23 | PLN | 77,778,000 | 26,266,908 | |||||
5.75% 10/25/21 | PLN | 155,266,000 | 58,692,459 | |||||
84,959,367 | ||||||||
Republic of Korea – 0.13% | ||||||||
Korea Treasury Inflation-Linked Bond | ||||||||
2.75% 6/10/20 | KRW | 11,431,536,755 | 11,950,611 | |||||
11,950,611 | ||||||||
Russia – 0.15% | ||||||||
Russia Eurobond 7.50% 3/31/30 | USD | 10,625,190 | 13,387,739 | |||||
13,387,739 | ||||||||
South Africa – 0.93% | ||||||||
Republic of South Africa | ||||||||
7.25% 1/15/20 | ZAR | 135,431,000 | 16,187,110 | |||||
8.00% 12/21/18 | ZAR | 107,773,000 | 13,286,951 | |||||
10.50% 12/21/26 | ZAR | 113,313,000 | 16,814,192 | |||||
13.50% 9/15/15 | ZAR | 117,058,000 | 15,422,814 |
48
Principal amount° | Value (U.S. $) | |||||||
ΔSovereign Bonds (continued) | ||||||||
South Africa (continued) | ||||||||
South Africa Inflation-Linked Bond | ||||||||
2.75% 1/31/22 | ZAR | 164,425,565 | $ | 21,925,375 | ||||
83,636,442 | ||||||||
Sri Lanka – 0.17% | ||||||||
# | Sri Lanka Government International Bond | |||||||
144A 5.875% 7/25/22 | USD | 13,896,000 | 14,764,500 | |||||
14,764,500 | ||||||||
Turkey – 0.59% | ||||||||
Turkey Government Bond | ||||||||
4.50% 2/11/15 | TRY | 12,512,486 | 7,562,606 | |||||
9.00% 3/5/14 | TRY | 35,921,000 | 20,769,488 | |||||
10.50% 1/15/20 | TRY | 34,782,000 | 24,164,133 | |||||
52,496,227 | ||||||||
United Kingdom – 0.90% | ||||||||
United Kingdom Gilt | ||||||||
4.00% 3/7/22 | GBP | 25,464,984 | 47,737,599 | |||||
4.50% 3/7/19 | GBP | 6,906,000 | 12,937,456 | |||||
4.75% 3/7/20 | GBP | 10,194,200 | 19,659,605 | |||||
80,334,660 | ||||||||
Uruguay – 0.16% | ||||||||
* | Uruguay Government International Bond | |||||||
8.00% 11/18/22 | USD | 9,967,500 | 14,363,168 | |||||
14,363,168 | ||||||||
Total Sovereign Bonds (cost $712,411,696) | 745,719,770 | |||||||
Supranational Banks – 0.51% | ||||||||
Andina de Fomento 4.375% 6/15/22 | 8,910,000 | 9,758,054 | ||||||
International Bank for Reconstruction | ||||||||
& Development | ||||||||
3.375% 4/30/15 | NOK | 94,610,000 | 16,959,874 | |||||
3.625% 6/22/20 | NOK | 54,680,000 | 10,210,066 | |||||
*6.00% 2/15/17 | AUD | 7,700,000 | 8,707,904 | |||||
Total Supranational Banks | ||||||||
(cost $42,113,655) | 45,635,898 |
49
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
U.S. Treasury Obligations – 3.06% | ||||||||
∞ | U.S. Treasury Bond 2.75% 11/15/42 | USD | 165,135,000 | $ | 160,206,710 | |||
U.S. Treasury Notes | ||||||||
0.625% 4/30/18 | 30,655,000 | 30,580,754 | ||||||
*2.00% 2/15/23 | 80,495,000 | 82,859,541 | ||||||
Total U.S. Treasury Obligations | ||||||||
(cost $270,938,347) | 273,647,005 | |||||||
Number of shares | ||||||||
Common Stock – 0.00% | ||||||||
†= | Century Communications | 7,875,000 | 0 | |||||
† | Delta Air Lines | 197 | 3,377 | |||||
Masco | 30 | 583 | ||||||
NRG Energy | 252 | 7,023 | ||||||
† | United Continental Holdings | 10 | 323 | |||||
Total Common Stock (cost $290,957) | 11,306 | |||||||
Convertible Preferred Stock – 0.81% | ||||||||
Apache 6.00% exercise price $109.12, | ||||||||
expiration date 8/1/13 | 148,015 | 6,263,995 | ||||||
ArcelorMittal 6.00% exercise price $20.94, | ||||||||
expiration date 12/21/15 | 106,550 | 2,222,569 | ||||||
Aspen Insurance Holdings 5.625% exercise | ||||||||
price $29.20, expiration date 12/31/49 | 97,129 | 6,410,514 | ||||||
Bank of America 7.25% exercise price | ||||||||
$50.00, expiration date 12/31/49 | 1,465 | 1,821,544 | ||||||
# | Chesapeake Energy 144A 5.75% exercise | |||||||
price $27.83, expiration date 12/31/49 | 3,222 | 3,266,303 | ||||||
Cliffs Natural Resources 7.00% exercise | ||||||||
price $35.53, expiration date 2/1/16 | 170,100 | 3,481,947 | ||||||
* | Goodyear Tire & Rubber 5.875% exercise | |||||||
price $18.21, expiration date 3/31/14 | 137,435 | 6,042,852 | ||||||
HealthSouth 6.50% exercise price $30.50, | ||||||||
expiration date 12/31/49 | 8,066 | 9,741,711 | ||||||
Huntington Bancshares 8.50% exercise | ||||||||
price $11.95, expiration date 12/31/49 | 3,150 | 4,189,500 | ||||||
MetLife 5.00% exercise price $44.28, | ||||||||
expiration date 9/4/13 | 160,225 | 8,035,284 | ||||||
PPL 9.50% exercise price $28.80, | ||||||||
expiration date 7/1/13 | 142,395 | 8,365,706 |
50
Number of shares | Value (U.S. $) | |||||||
Convertible Preferred Stock (continued) | ||||||||
SandRidge Energy 8.50% exercise price | ||||||||
$8.01, expiration date 12/31/49 | 56,252 | $ | 5,196,560 | |||||
Wells Fargo 7.50% exercise price | ||||||||
$156.71, expiration date 12/31/49 | 5,898 | 7,783,886 | ||||||
Total Convertible Preferred Stock | ||||||||
(cost $72,878,702) | 72,822,371 | |||||||
Preferred Stock – 0.66% | ||||||||
Alabama Power 5.625% | 303,360 | 7,766,016 | ||||||
# | Ally Financial 144A 7.00% | 9,820 | 9,691,419 | |||||
* | BB&T 5.85% | 222,725 | 5,893,304 | |||||
* | JPMorgan Chase 5.50% | 140,000 | 3,557,400 | |||||
• | PNC Financial Services Group 6.125% | 225,000 | 6,457,500 | |||||
* | Public Storage 5.20% | 223,000 | 5,648,590 | |||||
U.S. Bancorp | ||||||||
5.15% | 186,000 | 4,650,000 | ||||||
•6.50% | 227,400 | 6,812,904 | ||||||
* | Wells Fargo 5.20% | 320,000 | 8,201,600 | |||||
Total Preferred Stock (cost $55,414,991) | 58,678,733 | |||||||
Principal amount° | ||||||||
Short-Term Investments – 11.54% | ||||||||
≠Discount Note – 0.61% | ||||||||
Federal Home Loan Bank 0.085% 5/24/13 | USD | 54,740,327 | 54,739,999 | |||||
54,739,999 | ||||||||
Repurchase Agreements – 3.13% | ||||||||
Bank of America 0.11%, dated 4/30/13, to | ||||||||
be repurchased on 5/1/13, repurchase | ||||||||
price $71,010,097 (collateralized by U.S. | ||||||||
Government obligations 4.50% 5/15/38; | ||||||||
market value $72,430,088) | 71,009,880 | 71,009,880 | ||||||
BNP Paribas 0.14%, dated 4/30/13, to | ||||||||
be repurchased on 5/1/13, repurchase | ||||||||
price $209,564,935 (collateralized by | ||||||||
U.S. Government obligations | ||||||||
0.25%-0.875% 3/31/15-1/31/17; | ||||||||
market value $213,755,422) | 209,564,120 | 209,564,120 | ||||||
280,574,000 |
51
Statement of net assets
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | ||||||||
Short-Term Investments (continued) | |||||||||
≠U.S. Treasury Obligations – 7.80% | |||||||||
U.S. Treasury Bills | |||||||||
0.03% 5/30/13 | USD | 250,577,424 | $ | 250,573,414 | |||||
0.065% 5/9/13 | 110,319,610 | 110,318,838 | |||||||
0.105% 5/23/13 | 112,500,000 | 112,498,312 | |||||||
0.120% 6/6/13 | 112,500,000 | 112,497,975 | |||||||
0.125% 6/13/13 | 112,500,000 | 112,497,638 | |||||||
698,386,177 | |||||||||
Total Short-Term Investments | |||||||||
(cost $1,033,657,330) | 1,033,700,176 | ||||||||
Total Value of Securities Before Securities | |||||||||
Lending Collateral – 111.04% | |||||||||
(cost $9,504,259,408) | 9,944,379,938 | ||||||||
Number of shares | |||||||||
**Securities Lending Collateral – 1.93% | |||||||||
Investment Companies | |||||||||
Delaware Investments Collateral Fund No. 1 | 172,796,489 | 172,796,489 | |||||||
@†Mellon GSL Reinvestment Trust II | 5,190,821 | 0 | |||||||
Total Securities Lending Collateral | |||||||||
(cost $177,987,310) | 172,796,489 | ||||||||
©Total Value of Securities – 112.97% | |||||||||
(cost $9,682,246,718) | 10,117,176,427 | ||||||||
**Obligation to Return Securities Lending | |||||||||
Collateral – (1.99%) | (177,987,310 | ) | |||||||
Other Liabilities Net of Receivables | |||||||||
and Other Assets – (10.98%) | (983,301,245 | ) | |||||||
Net Assets Applicable to 952,377,378 | |||||||||
Shares Outstanding – 100.00% | $ | 8,955,887,872 |
52
Net Asset Value – Delaware Diversified Income Fund | ||||
Class A ($4,395,505,260 / 467,487,701 Shares) | $9.40 | |||
Net Asset Value – Delaware Diversified Income Fund | ||||
Class B ($15,561,642 / 1,657,743 Shares) | $9.39 | |||
Net Asset Value – Delaware Diversified Income Fund | ||||
Class C ($2,044,262,168 / 217,445,361 Shares) | $9.40 | |||
Net Asset Value – Delaware Diversified Income Fund | ||||
Class R ($149,963,455 / 15,957,722 Shares) | $9.40 | |||
Net Asset Value – Delaware Diversified Income Fund | ||||
Institutional Class ($2,350,595,347 / 249,828,851 Shares) | $9.41 | |||
Components of Net Assets at April 30, 2013: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 8,566,993,631 | ||
Distributions in excess of net investment income | (33,247,931 | ) | ||
Accumulated net realized loss | (4,545,289 | ) | ||
Net unrealized appreciation of investments and derivatives | 426,687,461 | |||
Total net assets | $ | 8,955,887,872 |
° | Principal amount is stated in the currency in which each security is denominated. |
• | Variable rate security. The rate shown is the rate as of April 30, 2013. Interest rates reset periodically. |
û | Interest only security. An interest only security is the interest only portion of a fixed income security which is separated and sold individually from the principal portion of the security. |
t | Pass Through Agreement. Security represents the contractual right to receive a proportionate amount of underlying payments due to the counterparty pursuant to various agreements related to the rescheduling of obligations and the exchange of certain notes. |
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At April 30, 2013, the aggregate value of Rule 144A securities was $1,810,549,129, which represented 20.22% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
* | Fully or partially on loan. |
Φ | Step coupon bond. Coupon increases or decreases periodically based on a predetermined schedule. Stated rate in effect at April 30, 2013. |
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At April 30, 2013, the aggregate value of fair valued securities was $0, which represented 0.00% of the Fund’s net assets. See Note 1 in ”Notes to financial statements.” |
‡ | Non income producing security. Security is currently in default. |
Δ | Securities have been classified by country of origin. |
53
Statement of net assets
Delaware Diversified Income Fund
« | Senior Secured Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally: (i) the prime rate offered by one or more United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate (LIBOR), and (iii) the certificate of deposit rate. Senior Secured Loans may be subject to restrictions on resale. Stated rate in effect at April 30, 2013. |
@ | Illiquid security. At April 30, 2013, the aggregate value of illiquid securities was $3,885,000, which represented 0.04% of the Fund’s net assets. See Note 10 in ”Notes to financial statements.” |
∞ | Fully or partially pledged as collateral for futures contracts. |
† | Non income producing security. |
≠ | The rate shown is the effective yield at time of purchase. |
** | See Note 9 in “Notes to financial statements” for additional information on securities lending collateral. |
© | Includes $172,295,682 of securities loaned. |
Net Asset Value and Offering Price Per Share – | |||
Delaware Diversified Income Fund | |||
Net asset value Class A (A) | $ | 9.40 | |
Sales charge (4.50% of offering price) (B) | 0.44 | ||
Offering price | $ | 9.84 |
(A) | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $100,000 or more. |
The following foreign currency exchange contracts, futures contracts and swap contracts were outstanding at April 30, 2013:1
Foreign Currency Exchange Contracts
Unrealized | |||||||||||||||
Appreciation | |||||||||||||||
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | (Depreciation) | |||||||||||
BAML | AUD | (41,202,956 | ) | USD | 42,736,942 | 5/10/13 | $ | 56,064 | |||||||
BAML | BRL | 72,185,117 | USD | (35,779,488 | ) | 5/10/13 | 256,614 | ||||||||
BAML | EUR | (123,089,699 | ) | USD | 160,284,206 | 5/10/13 | (1,829,316 | ) | |||||||
BAML | INR | 1,942,242,868 | USD | (36,005,835 | ) | 5/10/13 | 99,807 | ||||||||
BAML | JPY | (2,946,790,635 | ) | USD | 29,845,149 | 5/10/13 | (384,499 | ) |
54
Foreign Currency Exchange Contracts (continued) |
Unrealized | |||||||||||||||
Appreciation | |||||||||||||||
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | (Depreciation) | |||||||||||
BAML | NZD | (10,222,487 | ) | USD | 8,641,682 | 5/10/13 | $ | (114,496 | ) | ||||||
BAML | ZAR | (13,595,177 | ) | USD | 1,461,109 | 5/10/13 | (51,811 | ) | |||||||
BCLY | MXN | (118,312,703 | ) | USD | 9,713,527 | 5/10/13 | (21,487 | ) | |||||||
BNP | AUD | (7,604,203 | ) | USD | 7,903,884 | 5/10/13 | 26,924 | ||||||||
BNP | EUR | (27,474,835 | ) | USD | 35,779,488 | 5/10/13 | (405,849 | ) | |||||||
BNP | IDR | 261,725,803,275 | USD | (26,912,679 | ) | 5/10/13 | (10,604 | ) | |||||||
BNP | NOK | (151,891,923 | ) | USD | 25,637,771 | 5/10/13 | (692,014 | ) | |||||||
BNP | PLN | (26,374,540 | ) | USD | 8,371,371 | 5/10/13 | 31,254 | ||||||||
CITI | AUD | (27,863,952 | ) | USD | 28,942,287 | 5/10/13 | 78,874 | ||||||||
CITI | JPY | 1,053,567,228 | USD | (10,704,732 | ) | 5/10/13 | 103,286 | ||||||||
CITI | PLN | (70,466,555 | ) | USD | 22,183,013 | 5/10/13 | (99,814 | ) | |||||||
CITI | TRY | 41,919,696 | USD | (23,370,256 | ) | 5/10/13 | (23,082 | ) | |||||||
CS | IDR | 174,763,085,920 | USD | (17,887,726 | ) | 5/10/13 | 75,690 | ||||||||
CS | MXN | 347,536,369 | USD | (28,516,741 | ) | 5/10/13 | 79,270 | ||||||||
GSC | BRL | 93,443,186 | USD | (46,812,878 | ) | 5/10/13 | (164,368 | ) | |||||||
GSC | GBP | (21,132,205 | ) | USD | 32,323,186 | 5/10/13 | (501,291 | ) | |||||||
HSBC | BRL | 53,521,245 | USD | (26,912,679 | ) | 5/10/13 | (193,916 | ) | |||||||
HSBC | EUR | (22,601,012 | ) | USD | 29,394,198 | 5/10/13 | (372,140 | ) | |||||||
HSBC | GBP | (13,439,413 | ) | USD | 20,556,725 | 5/10/13 | (318,603 | ) | |||||||
HSBC | JPY | 2,594,060,948 | USD | (26,338,853 | ) | 5/10/13 | 272,318 | ||||||||
JPMC | BRL | 47,339,250 | USD | (23,740,848 | ) | 5/10/13 | (108,247 | ) | |||||||
JPMC | COP | (18,450,592,066 | ) | USD | 10,038,407 | 5/10/13 | (63,194 | ) | |||||||
JPMC | EUR | (28,203,025 | ) | USD | 36,697,776 | 5/10/13 | (446,614 | ) | |||||||
JPMC | GBP | (23,689,022 | ) | USD | 36,248,942 | 5/10/13 | (547,018 | ) | |||||||
JPMC | JPY | 1,951,654,627 | USD | (19,797,673 | ) | 5/10/13 | 223,373 | ||||||||
MNB | BRL | (2,962,136 | ) | USD | 1,481,068 | 5/1/13 | 732 | ||||||||
MSC | AUD | (43,204,870 | ) | USD | 44,893,748 | 5/10/13 | 139,149 | ||||||||
MSC | GBP | (7,957,549 | ) | USD | 12,180,621 | 5/10/13 | (179,774 | ) | |||||||
MSC | INR | 1,232,016,251 | USD | (22,358,830 | ) | 5/10/13 | 543,938 | ||||||||
MSC | JPY | 3,131,962,439 | USD | (31,803,353 | ) | 5/10/13 | 325,879 | ||||||||
MSC | PLN | (44,326,624 | ) | USD | 13,940,198 | 5/10/13 | (76,699 | ) | |||||||
TD | GBP | (2,770,918 | ) | USD | 4,234,522 | 5/10/13 | (69,521 | ) | |||||||
TD | INR | 1,460,362,701 | USD | (26,912,679 | ) | 5/10/13 | 234,973 | ||||||||
TD | JPY | (6,639,372,592 | ) | USD | 67,277,074 | 5/10/13 | (832,921 | ) | |||||||
TD | MXN | 344,187,872 | USD | (28,213,277 | ) | 5/10/13 | 107,212 | ||||||||
$ | (4,851,921 | ) |
55
Statement of net assets
Delaware Diversified Income Fund
Futures Contracts |
Unrealized | ||||||||||||||||
Notional Cost | Appreciation | |||||||||||||||
Contracts to Buy (Sell) | (Proceeds) | Notional Value | Expiration Date | (Depreciation) | ||||||||||||
(86) | Euro-Bund | $ | (16,362,102 | ) | $ | (16,601,313 | ) | 6/11/13 | $ | (239,211 | ) | |||||
(760) | Euro-O.A.T. | (133,123,818 | ) | (139,913,294 | ) | 6/11/13 | (6,789,476 | ) | ||||||||
268 | Long Gilt | 46,885,019 | 49,961,507 | 6/29/13 | 3,076,488 | |||||||||||
3,235 | U.S.Treasury 10 yr Notes | 427,995,347 | 431,417,578 | 6/29/13 | 3,422,231 | |||||||||||
$ | 325,394,446 | $ | (529,968 | ) |
Swap Contracts
CDS Contracts
Annual | Unrealized | |||||||||||||||
Protection | Termination | Appreciation | ||||||||||||||
Counterparty | Swap Referenced Obligation | Notional Value | Payments | Date | (Depreciation) | |||||||||||
Protection Purchased: | ||||||||||||||||
JPMC | CDX.NA.HY.19 5 yr | USD | 500,000 | 5.00% | 12/20/17 | $ | (14,366 | ) | ||||||||
ITRAXX Europe | ||||||||||||||||
JPMC | Crossover S19 V1 | EUR | 34,980,000 | 5.00% | 6/20/18 | (1,667,430 | ) | |||||||||
ITRAXX Europe Subordinate | ||||||||||||||||
JPMC | Financials 18.1 5 yr | EUR | 15,085,000 | 5.00% | 12/20/17 | (349,734 | ) | |||||||||
(2,031,530 | ) | |||||||||||||||
Protection Sold / | ||||||||||||||||
Moody’s Rating: | ||||||||||||||||
JPMC | CDX.NA.HY.19 5 yr / Baa | USD | 500,000 | 5.00% | 12/20/17 | 14,366 | ||||||||||
14,366 | ||||||||||||||||
Total | $ | (2,017,164 | ) |
IRS Contracts | ||||||||||||||||||||
Fixed Interest | Floating Interest | Unrealized | ||||||||||||||||||
Counterparty & Swap | Rate Received | Rate Received | Termination | Appreciation | ||||||||||||||||
Referenced Obligation | Notional Value | (Paid) | (Paid) | Date | (Depreciation) | |||||||||||||||
JPMC | ||||||||||||||||||||
2 yr COP | COP | 135,431,000,000 | (3.57 | %) | 3.066 | % | 4/22/15 | $ | (227,072 | ) | ||||||||||
5 yr COP | COP | 34,839,000,000 | 4.25 | % | (3.066 | %) | 4/23/18 | (258,414 | ) | |||||||||||
10 yr COP | COP | 13,217,000,000 | 4.91 | % | (3.066 | %) | 4/24/23 | 190,983 | ||||||||||||
Total | $ | (294,503 | ) |
56
The use of foreign currency exchange contracts, futures contracts and swap contracts involves elements of market risk and risks in excess of the amounts disclosed in the financial statements. The foreign currency exchange contracts and notional values presented above represent the Fund’s total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Fund’s net assets. |
1 See Note 8 in “Notes to financial statements.”
Summary of abbreviations:
ARM — Adjustable Rate Mortgage
AUD — Australian Dollar
BAML — Bank of America Merrill Lynch
BCLY — Barclays Bank
BNP — Banque Paribas
BRL— Brazilian Real
CAD — Canadian Dollar
CDS — Credit Default Swap
CITI — Citigroup Global Markets
COP — Colombian Peso
CS — Credit Suisse
EUR — European Monetary Unit
GBP — British Pound Sterling
GNMA — Government National Mortgage Association
GSC — Goldman Sachs Capital
GSMPS — Goldman Sachs Reperforming Mortgage Securities
HSBC — Hong Kong Shanghai Bank
IDR — Indonesian Rupiah
INR — Indian Rupee
IRS — Interest Rate Swap
JPMC — JPMorgan Chase Bank
JPY — Japanese Yen
KRW — South Korean Won
MASTR — Mortgage Asset Securitization Transactions, Inc.
MNB — Mellon National Bank
MSC — Morgan Stanley Capital
MXN — Mexican Peso
MYR — Malaysian Ringgit
NCUA — National Credit Union Administration
NGN — Nigerian Naira
NOK — Norwegian Krone
NZD — New Zealand Dollar
57
Statement of net assets
Delaware Diversified Income Fund
O.A.T. — Obligations Assimilables du Tresor |
See accompanying notes, which are an integral part of the financial statements.
58
Statement of assets and liabilities | |
Delaware Diversified Income Fund | April 30, 2013 (Unaudited) |
Assets: | ||
Investments, at value (including $172,295,682 of securities on loan) | $ | 8,910,679,762 |
Short-term investments, at value | 1,033,700,176 | |
Short-term investments held as collateral for loaned securities, at value | 172,796,489 | |
Cash collateral | 6,590,000 | |
Foreign currencies, at value | 6,075,924 | |
Receivable for securities sold | 681,536,153 | |
Receivables for fund shares sold | 21,848,538 | |
Dividends and interest receivable | 83,679,852 | |
Securities lending income receivable | 90,594 | |
Unrealized gain of foreign currency exchange contracts | 2,655,357 | |
Unrealized gain of credit default swap contracts | ||
(including upfront payments paid $21,077) | 35,443 | |
Unrealized gain of interest rate swap contracts | 190,983 | |
Total assets | 10,919,879,271 | |
Liabilities: | ||
Cash overdraft | 23,685 | |
Payables for securities purchased | 1,722,468,841 | |
Payables for fund shares redeemed | 32,889,486 | |
Obligation to return securities lending collateral | 177,987,310 | |
Unrealized loss of foreign currency exchange contracts | 7,507,278 | |
Unrealized loss of credit default swap contracts | ||
(including upfront payments received $2,543,918) | 4,575,448 | |
Unrealized loss of interest rate swap contracts | 485,486 | |
Variation margin payable on futures contracts | 750,877 | |
Distributions payable | 6,955,062 | |
Annual protection payments on credit default swap contracts | 384,455 | |
Due to manager and affiliates | 6,406,092 | |
Other accrued expenses | 3,289,036 | |
Other liabilities | 268,343 | |
Total liabilities | 1,963,991,399 | |
Total Net Assets | $ | 8,955,887,872 |
Investments, at cost | $ | 8,470,602,078 |
Short-term investments, at cost | 1,033,657,330 | |
Short-term investments held as collateral for loaned securities, at cost | 177,987,310 | |
Foreign currencies, at cost | 6,278,642 |
See accompanying notes, which are an integral part of the financial statements.
59
Statement of operations | |
Delaware Diversified Income Fund | Six Months Ended April 30, 2013 (Unaudited) |
Investment Income: | |||||||
Interest | $ | 172,878,898 | |||||
Dividends | 3,508,887 | ||||||
Securities lending income | 605,717 | $ | 176,993,502 | ||||
Expenses: | |||||||
Management fees | 20,291,924 | ||||||
Distribution expenses – Class A | 6,911,253 | ||||||
Distribution expenses – Class B | 92,890 | ||||||
Distribution expenses – Class C | 10,685,460 | ||||||
Distribution expenses – Class R | 465,667 | ||||||
Dividend disbursing and transfer agent fees and expenses | 6,225,315 | ||||||
Accounting and administration expenses | 1,790,029 | ||||||
Reports and statements to shareholders | 475,810 | ||||||
Custodian fees | 340,659 | ||||||
Legal fees | 316,638 | ||||||
Trustees’ fees | 216,113 | ||||||
Audit and tax | 193,827 | ||||||
Registration fees | 142,764 | ||||||
Insurance fees | 88,675 | ||||||
Consulting fees | 51,037 | ||||||
Dues and services | 27,266 | ||||||
Pricing fees | 23,287 | ||||||
Trustees’ expenses | 17,129 | 48,355,743 | |||||
Less waived distribution expenses – Class A | (1,151,876 | ) | |||||
Less waived distribution expenses – Class R | (77,611 | ) | |||||
Less expense paid indirectly | (4,053 | ) | |||||
Total operating expenses | 47,122,203 | ||||||
Net Investment Income | 129,871,299 |
60
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | $ | 89,542,757 | ||
Foreign currencies | 7,177,067 | |||
Foreign currency exchange contracts | (3,189,735 | ) | ||
Futures contracts | (13,544,141 | ) | ||
Swap contracts | (10,286,002 | ) | ||
Net realized gain | 69,699,946 | |||
Net change in unrealized appreciation/(depreciation) of: | ||||
Investments | (10,834,598 | ) | ||
Foreign currencies | 609,290 | |||
Foreign currency exchange contracts | (2,529,213 | ) | ||
Futures contracts | 1,441,368 | |||
Swap contracts | (1,517,179 | ) | ||
Net change in unrealized appreciation (depreciation) | (12,830,332 | ) | ||
Net Realized and Unrealized Gain | 56,869,614 | |||
Net Increase in Net Assets Resulting from Operations | $ | 186,740,913 |
See accompanying notes, which are an integral part of the financial statements.
61
Statements of changes in net assets
Delaware Diversified Income Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
4/30/13 | 10/31/12 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 129,871,299 | $ | 280,187,960 | ||||
Net realized gain | 69,699,946 | 110,739,974 | ||||||
Net change in unrealized appreciation (depreciation) | (12,830,332 | ) | 271,623,747 | |||||
Net increase in net assets resulting from operations | 186,740,913 | 662,551,681 | ||||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (79,370,580 | ) | (174,424,606 | ) | ||||
Class B | (250,086 | ) | (790,648 | ) | ||||
Class C | (28,803,071 | ) | (63,819,927 | ) | ||||
Class R | (2,478,144 | ) | (5,355,993 | ) | ||||
Institutional Class | (42,896,577 | ) | (76,401,112 | ) | ||||
Net realized gain: | ||||||||
Class A | (45,328,913 | ) | (111,610,939 | ) | ||||
Class B | (181,835 | ) | (732,822 | ) | ||||
Class C | (21,051,452 | ) | (51,559,199 | ) | ||||
Class R | (1,524,875 | ) | (3,715,709 | ) | ||||
Institutional Class | (22,570,318 | ) | (42,449,672 | ) | ||||
(244,455,851 | ) | (530,860,627 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 577,153,854 | 1,520,100,444 | ||||||
Class B | 28,960 | 350,897 | ||||||
Class C | 130,933,038 | 467,468,216 | ||||||
Class R | 32,493,047 | 74,337,347 | ||||||
Institutional Class | 586,740,641 | 1,048,542,437 | ||||||
Net asset value of shares issued upon reinvestment of | ||||||||
dividends and distributions: | ||||||||
Class A | 120,165,132 | 264,504,195 | ||||||
Class B | 396,867 | 1,316,405 | ||||||
Class C | 33,062,186 | 101,704,055 | ||||||
Class R | 3,825,794 | 9,025,664 | ||||||
Institutional Class | 56,823,889 | 103,962,231 | ||||||
1,541,623,408 | 3,591,311,891 |
62
Six Months | Year | |||||||
Ended | Ended | |||||||
4/30/13 | 10/31/12 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (1,162,065,255 | ) | $ | (1,333,075,813 | ) | ||
Class B | (6,681,528 | ) | (11,412,519 | ) | ||||
Class C | (336,944,735 | ) | (381,583,967 | ) | ||||
Class R | (46,089,068 | ) | (71,438,247 | ) | ||||
Institutional Class | (518,855,747 | ) | (564,023,225 | ) | ||||
(2,070,636,333 | ) | (2,361,533,771 | ) | |||||
Increase (decrease) in net assets derived from | ||||||||
capital share transactions | (529,012,925 | ) | 1,229,778,120 | |||||
Net Increase (Decrease) in Net Assets | (586,727,863 | ) | 1,361,469,174 | |||||
Net Assets: | ||||||||
Beginning of period | 9,542,615,735 | 8,181,146,561 | ||||||
End of period (including distributions in excess | ||||||||
of net investment income of $33,247,931 and | ||||||||
$37,607,692, respectively.) | $ | 8,955,887,872 | $ | 9,542,615,735 |
See accompanying notes, which are an integral part of the financial statements.
63
Financial highlights
Delaware Diversified Income Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the distributor. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
64
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.450 | $9.330 | $9.770 | $9.270 | $7.740 | $8.930 | |||||||||||||||
0.136 | 0.304 | 0.359 | 0.444 | 0.500 | 0.411 | |||||||||||||||
0.064 | 0.396 | (0.033 | ) | 0.598 | 1.611 | (1.053 | ) | |||||||||||||
0.200 | 0.700 | 0.326 | 1.042 | 2.111 | (0.642 | ) | ||||||||||||||
(0.160 | ) | (0.346 | ) | (0.399 | ) | (0.474 | ) | (0.581 | ) | (0.467 | ) | |||||||||
(0.090 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | (0.081 | ) | ||||||||||
(0.250 | ) | (0.580 | ) | (0.766 | ) | (0.542 | ) | (0.581 | ) | (0.548 | ) | |||||||||
$9.400 | $9.450 | $9.330 | $9.770 | $9.270 | $7.740 | |||||||||||||||
2.16% | 7.82% | 3.64% | 11.60% | 28.42% | (7.69% | ) | ||||||||||||||
$4,395,505 | $4,890,056 | $4,370,224 | $4,423,278 | $3,658,355 | $2,361,034 | |||||||||||||||
0.90% | 0.90% | 0.92% | 0.93% | 0.97% | 0.97% | |||||||||||||||
0.95% | 0.95% | 0.97% | 0.98% | 1.02% | 1.02% | |||||||||||||||
2.93% | 3.26% | 3.84% | 4.68% | 5.96% | 4.75% | |||||||||||||||
2.88% | 3.21% | 3.79% | 4.63% | 5.91% | 4.70% | |||||||||||||||
138% | 238% | 237% | 232% | 213% | 251% |
65
Financial highlights
Delaware Diversified Income Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income to average net assets |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total 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. |
See accompanying notes, which are an integral part of the financial statements.
66
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.440 | $9.320 | $9.750 | $9.260 | $7.730 | $8.920 | |||||||||||||||
0.101 | 0.233 | 0.288 | 0.372 | 0.438 | 0.346 | |||||||||||||||
0.064 | 0.397 | (0.022 | ) | 0.589 | 1.610 | (1.053 | ) | |||||||||||||
0.165 | 0.630 | 0.266 | 0.961 | 2.048 | (0.707 | ) | ||||||||||||||
(0.125 | ) | (0.276 | ) | (0.329 | ) | (0.403 | ) | (0.518 | ) | (0.402 | ) | |||||||||
(0.090 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | (0.081 | ) | ||||||||||
(0.215 | ) | (0.510 | ) | (0.696 | ) | (0.471 | ) | (0.518 | ) | (0.483 | ) | |||||||||
$9.390 | $9.440 | $9.320 | $9.750 | $9.260 | $7.730 | |||||||||||||||
1.78% | 7.02% | 2.98% | 10.78% | 27.51% | (8.39% | ) | ||||||||||||||
$15,562 | $21,974 | $31,451 | $45,741 | $50,608 | $50,501 | |||||||||||||||
1.65% | 1.65% | 1.67% | 1.68% | 1.72% | 1.72% | |||||||||||||||
2.18% | 2.51% | 3.09% | 3.93% | 5.21% | 4.00% | |||||||||||||||
138% | 238% | 237% | 232% | 213% | 251% |
67
Financial highlights
Delaware Diversified Income Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income to average net assets |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total 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. |
See accompanying notes, which are an integral part of the financial statements.
68
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.450 | $9.330 | $9.760 | $9.270 | $7.740 | $8.930 | |||||||||||||||
0.101 | 0.234 | 0.289 | 0.373 | 0.437 | 0.346 | |||||||||||||||
0.064 | 0.397 | (0.023 | ) | 0.588 | 1.611 | (1.054 | ) | |||||||||||||
0.165 | 0.631 | 0.266 | 0.961 | 2.048 | (0.708 | ) | ||||||||||||||
(0.125 | ) | (0.277 | ) | (0.329 | ) | (0.403 | ) | (0.518 | ) | (0.401 | ) | |||||||||
(0.090 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | (0.081 | ) | ||||||||||
(0.215 | ) | (0.511 | ) | (0.696 | ) | (0.471 | ) | (0.518 | ) | (0.482 | ) | |||||||||
$9.400 | $9.450 | $9.330 | $9.760 | $9.270 | $7.740 | |||||||||||||||
1.78% | 7.01% | 2.98% | 10.65% | 27.47% | (8.39% | ) | ||||||||||||||
$2,044,262 | $2,230,985 | $2,012,603 | $2,097,340 | $1,375,429 | $717,511 | |||||||||||||||
1.65% | 1.65% | 1.67% | 1.68% | 1.72% | 1.72% | |||||||||||||||
2.18% | 2.51% | 3.09% | 3.93% | 5.21% | 4.00% | |||||||||||||||
138% | 238% | 237% | 232% | 213% | 251% |
69
Financial highlights
Delaware Diversified Income Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the distributor. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
70
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.450 | $9.330 | $9.760 | $9.270 | $7.730 | $8.930 | |||||||||||||||
0.124 | 0.280 | 0.336 | 0.420 | 0.479 | 0.390 | |||||||||||||||
0.064 | 0.397 | (0.023 | ) | 0.589 | 1.621 | (1.064 | ) | |||||||||||||
0.188 | 0.677 | 0.313 | 1.009 | 2.100 | (0.674 | ) | ||||||||||||||
(0.148 | ) | (0.323 | ) | (0.376 | ) | (0.451 | ) | (0.560 | ) | (0.445 | ) | |||||||||
(0.090 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | (0.081 | ) | ||||||||||
(0.238 | ) | (0.557 | ) | (0.743 | ) | (0.519 | ) | (0.560 | ) | (0.526 | ) | |||||||||
$9.400 | $9.450 | $9.330 | $9.760 | $9.270 | $7.730 | |||||||||||||||
2.03% | 7.55% | 3.49% | 11.33% | 28.27% | (8.04% | ) | ||||||||||||||
$149,964 | $160,695 | $146,620 | $172,642 | $137,179 | $96,238 | |||||||||||||||
1.15% | 1.15% | 1.17% | 1.18% | 1.22% | 1.22% | |||||||||||||||
1.25% | 1.25% | 1.27% | 1.28% | 1.32% | 1.32% | |||||||||||||||
2.68% | 3.01% | 3.59% | 4.43% | 5.71% | 4.50% | |||||||||||||||
2.58% | 2.91% | 3.49% | 4.33% | 5.61% | 4.40% | |||||||||||||||
138% | 238% | 237% | 232% | 213% | 251% |
71
Financial highlights
Delaware Diversified Income Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of net investment income to average net assets |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total 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. |
See accompanying notes, which are an integral part of the financial statements.
72
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.460 | $9.340 | $9.770 | $9.280 | $7.740 | $8.940 | |||||||||||||||
0.148 | 0.327 | 0.383 | 0.470 | 0.521 | 0.433 | |||||||||||||||
0.064 | 0.397 | (0.023 | ) | 0.586 | 1.621 | (1.064 | ) | |||||||||||||
0.212 | 0.724 | 0.360 | 1.056 | 2.142 | (0.631 | ) | ||||||||||||||
(0.172 | ) | (0.370 | ) | (0.423 | ) | (0.498 | ) | (0.602 | ) | (0.488 | ) | |||||||||
(0.090 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | (0.081 | ) | ||||||||||
(0.262 | ) | (0.604 | ) | (0.790 | ) | (0.566 | ) | (0.602 | ) | (0.569 | ) | |||||||||
$9.410 | $9.460 | $9.340 | $9.770 | $9.280 | $7.740 | |||||||||||||||
2.29% | 8.08% | 4.01% | 11.76% | 28.87% | (7.57% | ) | ||||||||||||||
$2,350,595 | $2,238,906 | $1,620,249 | $1,242,001 | $323,134 | $85,857 | |||||||||||||||
0.65% | 0.65% | 0.67% | 0.68% | 0.72% | 0.72% | |||||||||||||||
3.18% | 3.51% | 4.09% | 4.93% | 6.21% | 5.00% | |||||||||||||||
138% | 238% | 237% | 232% | 213% | 251% |
73
Notes to financial statements | ||
Delaware Diversified Income Fund | April 30, 2013 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as a Delaware statutory trust and offers four series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities Fund, Delaware International Bond Fund and Delaware U.S. Growth Fund. These financial statements and related notes pertain to Delaware Diversified Income Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class B, Class C, Class R and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of 4.50%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. The investment objective of the Fund is to seek maximum long-term total return, consistent with reasonable risk.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used, which approximates fair value. Securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Debt securities, credit default swap (CDS) contracts and interest rate swap contracts are valued based upon valuations provided by an independent pricing service or broker/counterparty and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Swap prices are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. Foreign currency
74
exchange contracts and forward foreign cross currency exchange contracts are valued at the mean between the bid and ask price, which approximates fair value. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Futures contracts and options on futures are valued at the daily quoted settlement prices. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices, which approximates fair value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal & Foreign Income Taxes — No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2009 – Oct. 31, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
Class Accounting — Investment income and common expenses are allocated to the various classes of the Fund on the basis of “settled shares” of each class in relation to the net assets of the Fund. Realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with
75
Notes to financial statements
Delaware Diversified Income Fund
1. Significant Accounting Policies (continued)
the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on April 30, 2013.
To Be Announced Trades — The Fund may contract to purchase securities for a fixed price at a transaction date beyond the customary settlement period (e.g, “when issued,” “delayed delivery,” “forward commitment,” or “TBA transactions”) consistent with the Fund’s ability to manage its investment portfolio and meet redemption requests. These transactions involve a commitment by the Fund to purchase securities for a predetermined price or yield with payment and delivery taking place more than three days in the future, or after a period longer than the customary settlement period for that type of security. No interest will be earned by the Fund on such purchases until the securities are delivered; however, the market value may change prior to delivery.
Foreign Currency Transactions — Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Fund’s prospectus. The value of all assets and liabilities denominated in foreign currencies is translated daily into U.S. dollars at the exchange rate of such currencies against the U.S. dollar. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund generally bifurcates that portion of realized gains and losses on investments in debt securities which is due to changes in foreign exchange rates from that which is due to changes in market prices of debt securities. That portion of gains (losses) is included in the statement of operations under the caption net realized gains (loss) on foreign currencies. For foreign equity securities, these changes are included in net realized and unrealized gain or loss on investments. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific
76
securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are amortized to interest income over the lives of the respective securities using the effective interest method. Realized gains (losses) on paydowns of asset- and mortgage-backed securities are classified as interest income. Withholding taxes and reclaims on foreign interest have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares dividends daily from net investment income and pays such dividends monthly and declares and pays distributions from net realized gain on investments, if any, annually. The Fund may distribute income dividends and capital gains more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended April 30, 2013.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which are used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2013, the Fund earned $4,053 under this agreement.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.55% on the first $500 million of average daily net assets of the Fund, 0.50% on the next $500 million, 0.45% on the next $1.5 billion and 0.425% on average daily net assets in excess $2.5 billion.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments® Family of Funds on a relative net asset value basis. For the year ended Oct. 31, 2012, the Fund was charged $223,860 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
77
Notes to financial statements
Delaware Diversified Income Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
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 Class C shares and 0.60% of the average daily net assets of the Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to limit the Class A and Class R shares’ 12b-1 fees through Feb. 28, 2014 to 0.25% and 0.50%, respectively, of the classes’ average daily net assets.
At April 30, 2013, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 3,249,518 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 198,285 | ||
Distribution fees payable to DDLP | 2,671,656 | ||
Other expenses payable to DMC and affiliates* | 286,633 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Expenses include items such as printing of shareholder reports, legal and tax services, registration fees and trustees’ fees.
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates’ employees. For the six months ended April 30, 2013, the Fund was charged $ 147,131 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2013, DDLP earned $133,440 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2013, DDLP received gross CDSC commissions of $29,716, $690 and $21,573 on redemptions 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, 2013, the Fund made purchases of $9,376,349,282 and sales of $ 9,266,343,572 of investment securities other than U.S. government securities and short-term investments. For the six months ended April 30, 2013, the Fund made purchases of $ 1,552,385,423 and sales of 1,809,659,970 of long-term U.S. government securities.
78
At April 30, 2013, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2013, the cost of investments was $9,723,610,960. At April 30, 2013, the net unrealized appreciation was $393,565,467 of which $436,530,871 related to unrealized appreciation of investments and $42,965,404 related to unrealized depreciation of investments.
U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three level hierarchy of inputs is summarized below.
Level 1 – inputs are quoted prices in active markets for identical investments (e.g., equity securities, open-end investment companies, futures contracts, exchange-traded options contracts)
Level 2 – other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities)
Level 3 – inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities)
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
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Notes to financial statements
Delaware Diversified Income Fund
3. Investments (continued)
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of April 30, 2013:
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Agency, Asset- & Mortgage- | |||||||||||||||
Backed Securities | $ | — | $ | 2,057,438,954 | $ | 10,053,279 | $ | 2,067,492,233 | |||||||
Corporate Debt | 29,754,611 | 5,538,334,710 | — | 5,568,089,321 | |||||||||||
Common Stock | 11,306 | — | — | 11,306 | |||||||||||
Foreign Debt | — | 942,366,040 | — | 942,366,040 | |||||||||||
Municipal Bond | — | 395,124 | — | 395,124 | |||||||||||
U.S. Treasury Obligations | — | 273,647,005 | — | 273,647,005 | |||||||||||
Preferred Stock | 45,429,913 | 13,248,820 | — | 58,678,733 | |||||||||||
Short-Term Investments | — | 1,033,700,176 | — | 1,033,700,176 | |||||||||||
Securities Lending | |||||||||||||||
Collateral | — | 172,796,489 | — | 172,796,489 | |||||||||||
Total | $ | 75,195,830 | $ | 10,031,927,318 | $ | 10,053,279 | $ | 10,117,176,427 | |||||||
Foreign Currency | |||||||||||||||
Exchange Contracts | $ | — | $ | (4,851,921 | ) | $ | — | $ | (4,851,921 | ) | |||||
Futures Contracts | $ | (529,968 | ) | $ | — | $ | — | $ | (529,968 | ) | |||||
Swap Contracts | $ | — | $ | (2,311,667 | ) | $ | — | $ | (2,311,667 | ) |
The securities that have been deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
During the six months ended April 30, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the end of the reporting period.
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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. GAAP. 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, 2013 and the year ended Oct. 31, 2012 was as follows:
Six Months Ended | Year Ended | |||||||
4/30/13* | 10/31/12 | |||||||
Ordinary income | $ | 207,185,589 | $ | 412,360,537 | ||||
Long-term capital gain | 37,270,262 | 118,500,090 | ||||||
Total | $ | 244,455,851 | $ | 530,860,627 |
*Tax information for the period ended April 30, 2013 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, 2013, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 8,566,993,631 | ||
Undistributed ordinary income | 3,497,197 | |||
Undistributed long-term capital gain | 32,683,550 | |||
Distributions payable | (6,955,062 | ) | ||
Other temporary differences | (30,212,223 | ) | ||
Unrealized appreciation | 389,880,779 | |||
Net assets | $ | 8,955,887,872 |
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 of futures contracts, mark-to-market of foreign currency exchange contracts, tax deferral of losses on straddles, tax treatment of CDS contracts, tax treatment of contingent payment on debt instruments, distributions payable and tax treatment of market discount and premium on debt instruments.
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 dividends and distributions, gain (loss) on foreign currency transactions, market discount and premium on certain debt instruments and tax treatments of paydowns gains (losses) of asset- and mortgage-backed securities. Results of operations and net assets were not affected by these reclassifications. For the six months ended April 30, 2013, the Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Distributions in excess of net investment income | $ | 28,286,920 | ||
Accumulated net realized loss | (28,286,920 | ) |
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Notes to financial statements
Delaware Diversified Income Fund
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
4/30/13 | 10/31/12 | |||||
Shares sold: | ||||||
Class A | 61,721,471 | 163,424,367 | ||||
Class B | 3,089 | 37,636 | ||||
Class C | 13,985,434 | 50,237,269 | ||||
Class R | 3,478,352 | 7,995,088 | ||||
Institutional Class | 62,636,825 | 112,519,790 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 12,868,472 | 28,668,206 | ||||
Class B | 42,571 | 143,303 | ||||
Class C | 3,542,464 | 11,038,873 | ||||
Class R | 410,098 | 979,616 | ||||
Institutional Class | 6,084,289 | 11,255,199 | ||||
164,773,065 | 386,299,347 | |||||
Shares redeemed: | ||||||
Class A | (124,316,822 | ) | (143,178,609 | ) | ||
Class B | (715,760 | ) | (1,228,493 | ) | ||
Class C | (36,078,644 | ) | (40,970,892 | ) | ||
Class R | (4,935,876 | ) | (7,687,930 | ) | ||
Institutional Class | (55,537,810 | ) | (60,631,716 | ) | ||
(221,584,912 | ) | (253,697,640 | ) | |||
Net increase (decrease) | (56,811,847 | ) | 132,601,707 |
For the six months ended April 30, 2013 and year ended Oct. 31, 2012, 109,754 Class B shares were converted to 109,743 Class A shares valued at $1,025,591 and 372,298 Class B shares were converted to 372,250 Class A shares valued at $3,468,560, 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.
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $125,000,000 revolving line of credit to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants were permitted to borrow up to a maximum of one third of their net assets
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under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit available under the agreement expired on Nov. 13, 2012.
On Nov. 13, 2012, the Fund, along with the other Participants, entered into an amendment to the agreement for a $125,000,000 revolving line of credit. The agreement is to be used as described above and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of April 30, 2013, or at any time during the period then ended.
8. Derivatives
U.S. GAAP requires disclosures that enable investors to understand: 1) how and why an entity uses derivatives; 2) how they are accounted for; and 3) how they affect an entity’s results of operations and financial position.
Foreign Currency Exchange Contracts — The Fund may enter into foreign currency exchange contracts and forward foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts and forward foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Futures Contracts A futures contract is an agreement in which the writer (or seller) of the contract agrees to deliver to the buyer an amount of cash or securities equal to a specific dollar amount times the difference between the value of a specific security or index at the close of the last trading day of the contract and the price at which the agreement is made. The Fund may use futures in the normal course of pursuing its investment objectives. The Fund may invest in futures contracts to hedge its existing portfolio securities against fluctuations in fair value caused by changes in prevailing market interest rates. The Fund may use futures contracts to a limited
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Notes to financial statements
Delaware Diversified Income Fund
8. Derivatives (continued)
extent, with the objectives of maintaining full exposure to the stock market, enhancing returns, maintaining liquidity and minimizing costs. Upon entering into a futures contract, the Fund deposits cash or pledges U.S. government securities to a broker, equal to the minimum “initial margin” requirements of the exchange on which the contract is traded. Subsequent payments are received from the broker or paid to the broker each day, based on the daily fluctuation in the market value of the contract. These receipts or payments are known as “variation margin” and are recorded daily by the Fund as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Risks of entering into futures contracts include potential imperfect correlation between the futures contracts and the underlying securities and the possibility of an illiquid secondary market for these instruments. When investing in futures, there is reduced counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default.
Options Contracts — During the six months ended April 30, 2013, the Fund entered into options contracts in the normal course of pursuing its investment objective. The Fund may buy or write options contracts for any number of reasons, including without limitation: to manage the Fund’s exposure to changes in securities prices and foreign currencies; as an efficient means of adjusting the Fund’s overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, futures, swaps “swaptions”, financial indices, and foreign currencies. When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of the options purchased. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty risk because the counterparty is only obligated to pay premiums and does not bear the market risk of an unfavorable market change. During the six months ended April 30, 2013, the Fund did not enter into options written.
Swap Contracts — The Fund may enter into interest rate swap contracts and credit default swap (CDS) contracts in the normal course of pursuing its investment objective. The Fund may use interest rate swaps to adjust the Fund’s sensitivity to interest rates or to hedge against changes in interest rates. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets.
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The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty combined with any credit enhancements, is rated at least BBB- by S&P or Baa3 by Moody’s or is determined to be of equivalent quality by the manager.
Interest Rate Swaps. An interest rate swap contract is an exchange of interest rates between counterparties. In one instance, an interest rate swap involves payments received by the Fund 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 Fund 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 Fund’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. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the interest rate swap contract’s remaining life, to the extent that the amount is positive. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the Fund in connection with an unwinding or assignment of a CDS contract. Upon the occurrence of a credit event, the seller of protection would pay the par (or other agreed-upon) value of the reference security (or basket of securities) to the counterparty. Credit events generally include, among others, bankruptcy, failure to pay, and obligation default.
During the six months ended April 30, 2013, the Fund entered into CDS contracts as a purchaser and seller of protection. Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. The Fund had posted $ 6,590,000 as cash collateral for certain open derivatives which is presented as cash collateral on the statement of assets and liabilities. The Fund received $1,667,000 as securities collateral and $430,000 as cash collateral for certain open derivatives.
85
Notes to financial statements
Delaware Diversified Income Fund
8. Derivatives (continued)
As disclosed in the footnotes to the statement of net assets, at April 30, 2013, the notional value of the protection sold was $500,000, which reflects the maximum potential amount the Fund would have been required to make as a seller of credit protection if a credit event had occurred. In addition to serving as the source of the current value of the securities, the quoted market prices and resulting market values for CDS agreements on securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative if the swap agreement has been closed/sold as of the period end. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the reference entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement. At April 30, 2013, the net unrealized appreciation of the protection sold was $14,366.
CDS contracts may involve greater risks than if the Fund had invested in the reference obligation directly. CDS contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Fund’s maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Swaps Generally. The value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the agreement. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts shown on the statement of net assets.
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Fair values of derivative instruments as of April 30, 2013 were as follows:
Asset Derivatives | Liability Derivatives | ||||||||||
Statement of Assets | Statement of Assets | ||||||||||
and Liabilities Location | Fair Value | and Liabilities Location | Fair Value | ||||||||
Forward currency exchange contracts (Foreign currency exchange contracts) | Unrealized gain of foreign currency contracts | $ | 2,655,357 | Unrealized loss of foreign currency contracts | $ | (7,507,278 | ) | ||||
Interest rate contracts | |||||||||||
(Futures contracts) | Variation margin receivable on futures contracts | 6,498,719 | Variation margin payable on futures contracts | (7,028,687 | )* | ||||||
Interest rate contracts | |||||||||||
(Swap contracts) | Unrealized gain of interest rate swap contracts | 190,983 | Unrealized loss of interest rate swap contracts | (485,486 | ) | ||||||
Credit contracts | |||||||||||
(Swap contracts) | Unrealized gain of credit default swap contracts | 35,443 | Unrealized loss of credit default swap contracts | (4,575,448 | ) | ||||||
Total | $ | 9,380,502 | $ | (19,596,899 | ) |
*Includes cumulative depreciation of futures contracts from the date the contracts are opened through April 30, 2013. Only current day variation margin is reported on the Fund’s statement of assets and liabilities
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Notes to financial statements
Delaware Diversified Income Fund
8. Derivatives (continued)
The effect of derivative instruments on the statement of operations for the six months ended April 30, 2013 was as follows:
Change in | ||||||||||
Unrealized | ||||||||||
Realized Gain | Appreciation | |||||||||
(Loss) on | (Depreciation) | |||||||||
Derivatives | on Derivatives | |||||||||
Location of Gain (Loss) on | Recognized in | Recognized in | ||||||||
Derivatives Recognized in Income | Income | Income | ||||||||
Forward currency exchange contracts (Foreign currency exchange contracts) | Net realized loss on foreign currency exchange contracts and net change in unrealized appreciation (depreciation) of foreign currency exchange contracts | $ | (3,189,735 | ) | $ | (2,529,213 | ) | |||
Interest rate contracts | ||||||||||
(Futures contracts) | Net realized loss on futures contracts and net change in unrealized appreciation (depreciation) of futures contracts | (13,544,141 | ) | 1,441,368 | ||||||
Interest rate contracts | ||||||||||
(Swap contracts) | Net realized loss on swap contracts and net change in unrealized appreciation (depreciation) of swap contracts | (1,024 | ) | (294,503 | ) | |||||
Credit contracts | ||||||||||
(Swap contracts) | Net realized loss on swap contracts and net change in unrealized appreciation (depreciation) of swap contracts | (10,284,978 | ) | (1,222,676 | ) | |||||
Total | $ | (27,019,878 | ) | $ | (2,605,024 | ) |
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Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended April 30, 2013. The average balance of derivatives held is generally similar to the volume of derivative activity for the six months ended April 30, 2013.
Long | Short | ||||
Derivative | Derivative | ||||
Volume | Volume | ||||
Foreign currency exchange contracts (average cost) | USD | 494,198,180 | USD | 657,204,021 | |
Futures contracts (average notional value) | 455,918,099 | 345,030,474 | |||
Options contracts (average notional value) | 43,237 | — | |||
Interest rate swap contracts | |||||
(average notional value) | 211,382 | — | |||
COP | 11,958,016,260 | — | |||
CDS contracts (average notional value)* | USD | 20,786,941 | 182,927 | ||
EUR | 36,322,480 |
*Long represents buying protection and short represents selling protection.
9. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. In Oct. 2008, BNY Mellon transferred certain distressed securities from the
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Notes to financial statements
Delaware Diversified Income Fund
9. Securities Lending (continued)
Fund’s previous collateral investment pool into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund, or at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pool’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
At April 30, 2013, the value of securities on loan was $172,295,682, for which cash collateral was received and invested in accordance with the Lending Agreement. At April 30, 2013, the value of invested collateral was $ 172,796,489. These investments are presented on the statement of net assets under the caption “Securities Lending Collateral”.
10. Credit and Market Risk
The Fund invests a portion of its assets in high yield fixed income securities, which are securities rated BBB- by Standard & Poor’s and Baa3 by Moody’s Investors Services, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment-grade securities.
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The Fund invests in 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 or 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 Fund’s yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in these securities even if the securities are rated in the highest rating categories.
Some countries in which the Fund may invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is deterioration in a country’s balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.
The Fund invests in certain obligations held by the Fund that may have liquidity protection to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies or letter of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether
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Notes to financial statements
Delaware Diversified Income Fund
10. Credit and Market Risk (continued)
individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. Rule 144A and illiquid securities have been identified on the statement of net assets.
11. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
12. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to April 30, 2013 that would require recognition or disclosure in the Fund’s financial statements.
92
About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett | Joseph W. Chow Former Executive Vice President State Street Corporation Brookline, MA John A. Fry President Drexel University Philadelphia, PA Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor Senior Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens | David P. O’Connor Executive Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware Diversified Income Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawareinvestments.com. | |||
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Fund’s Schedule of Investments are available without charge on the Fund’s website at delawareinvestments.com. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund’s website at delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
93
Semiannual report Delaware U.S. Growth Fund April 30, 2013 U.S. growth equity mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware U.S. Growth Fund at delawareinvestments.com.
Manage your investments online
- 24-hour access to your account information
- Obtain share prices
- Check your account balance and recent transactions
- Request statements or literature
- Make purchases and redemptions
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
Investments in Delaware U.S. Growth Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Security type/sector allocation and | |
top 10 equity holdings | 3 |
Statement of net assets | 5 |
Statement of operations | 9 |
Statements of changes in net assets | 10 |
Financial highlights | 12 |
Notes to financial statements | 22 |
About the organization | 32 |
Unless otherwise noted, views expressed herein are current as of April 30, 2013, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from November 1, 2012 to April 30, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2012 to April 30, 2013.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware U.S. Growth Fund
Expense analysis of an investment of $1,000
Beginning | Ending | Annualized | Expenses | ||||||||||||
Account Value | Account Value | Expense | Paid During Period | ||||||||||||
11/1/12 | 4/30/13 | Ratio | 11/1/12 to 4/30/13* | ||||||||||||
Actual Fund return† | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,120.20 | 1.10% | $ | 5.78 | ||||||||
Class B | 1,000.00 | 1,116.90 | 1.85% | 9.71 | |||||||||||
Class C | 1,000.00 | 1,116.50 | 1.85% | 9.71 | |||||||||||
Class R | 1,000.00 | 1,119.40 | 1.35% | 7.09 | |||||||||||
Institutional Class | 1,000.00 | 1,121.70 | 0.85% | 4.47 | |||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.34 | 1.10% | $ | 5.51 | ||||||||
Class B | 1,000.00 | 1,015.62 | 1.85% | 9.25 | |||||||||||
Class C | 1,000.00 | 1,015.62 | 1.85% | 9.25 | |||||||||||
Class R | 1,000.00 | 1,018.10 | 1.35% | 6.76 | |||||||||||
Institutional Class | 1,000.00 | 1,020.58 | 0.85% | 4.26 |
*“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).
†Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.
2
Security type/sector allocation and | |
top 10 equity holdings | |
Delaware U.S. Growth Fund | As of April 30, 2013 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Security type/sector | Percentage of net assets | |
²Common Stock | 96.85 | % |
Consumer Discretionary | 11.14 | % |
Consumer Staples | 4.64 | % |
Energy | 9.82 | % |
Financial Services | 19.30 | % |
Healthcare | 13.62 | % |
Materials & Processing | 2.43 | % |
Producer Durables | 1.26 | % |
Technology | 34.64 | % |
Warrant | 0.18 | % |
Short-Term Investments | 2.37 | % |
Securities Lending Collateral | 0.00 | % |
Total Value of Securities | 99.40 | % |
Obligation to Return Securities Lending Collateral | (0.05 | %) |
Receivables and Other Assets Net of Other Liabilities | 0.65 | % |
Total Net Assets | 100.00 | % |
²Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting.
3
Security type/sector allocation and
top 10 equity holdings
Holdings are for informational purposes only and are subject to change at any time. They are not a recommendation to buy, sell, or hold any security.
Top 10 equity holdings | Percentage of net assets | |
Visa Class A | 5.73 | % |
Crown Castle International | 5.40 | % |
MasterCard Class A | 4.97 | % |
EOG Resources | 4.95 | % |
Kinder Morgan | 4.87 | % |
Adobe Systems | 4.81 | % |
Allergan | 4.69 | % |
Walgreen | 4.64 | % |
QUALCOMM | 4.59 | % |
Celgene | 4.23 | % |
4
Statement of net assets | |
Delaware U.S. Growth Fund | April 30, 2013 (Unaudited) |
Number of shares | Value | ||||
²Common Stock – 96.85% | |||||
Consumer Discretionary – 11.14% | |||||
† | Liberty Interactive Class A | 2,526,240 | $ | 53,783,649 | |
NIKE Class B | 492,950 | 31,351,620 | |||
† | priceline.com | 69,450 | 48,336,506 | ||
† | Sally Beauty Holdings | 711,748 | 21,395,145 | ||
154,866,920 | |||||
Consumer Staples – 4.64% | |||||
Walgreen | 1,301,950 | 64,459,545 | |||
64,459,545 | |||||
Energy – 9.82% | |||||
EOG Resources | 567,800 | 68,794,648 | |||
Kinder Morgan | 1,731,783 | 67,712,715 | |||
136,507,363 | |||||
Financial Services – 19.30% | |||||
CME Group | 461,923 | 28,112,634 | |||
† | IntercontinentalExchange | 265,325 | 43,229,402 | ||
MasterCard Class A | 125,025 | 69,130,073 | |||
Progressive | 1,898,389 | 48,010,258 | |||
Visa Class A | 473,025 | 79,685,791 | |||
268,168,158 | |||||
Healthcare – 13.62% | |||||
Allergan | 573,600 | 65,132,280 | |||
† | Celgene | 498,425 | 58,849,040 | ||
Novo Nordisk ADR | 218,725 | 38,633,397 | |||
Perrigo | 223,781 | 26,721,689 | |||
189,336,406 | |||||
Materials & Processing – 2.43% | |||||
Syngenta ADR | 394,475 | 33,727,613 | |||
33,727,613 | |||||
Producer Durables – 1.26% | |||||
Caterpillar | 207,125 | 17,537,274 | |||
17,537,274 | |||||
Technology – 34.64% | |||||
† | Adobe Systems | 1,484,175 | 66,906,609 | ||
Apple | 129,050 | 57,136,888 | |||
† | BMC Software | 985,207 | 44,807,214 | ||
† | Crown Castle International | 974,024 | 74,999,847 |
5
Statement of net assets
Delaware U.S. Growth Fund
Number of shares | Value | |||||
²Common Stock (continued) | ||||||
Technology (continued) | ||||||
† | Google Class A | 63,400 | $ | 52,277,738 | ||
Intuit | 799,775 | 47,698,581 | ||||
QUALCOMM | 1,036,000 | 63,838,320 | ||||
† | Teradata | 640,725 | 32,721,826 | |||
† | VeriFone Systems | 510,175 | 10,958,559 | |||
*† | VeriSign | 653,800 | 30,120,566 | |||
481,466,148 | ||||||
Total Common Stock (cost $1,004,409,162) | 1,346,069,427 | |||||
Warrant – 0.18% | ||||||
† | Kinder Morgan CW17 strike price $40.00, | |||||
expiration date 5/25/17 | 460,552 | 2,565,275 | ||||
Total Warrant (cost $843,781) | 2,565,275 | |||||
Principal amount | ||||||
Short-Term Investments – 2.37% | ||||||
≠Discount Note – 0.16% | ||||||
Federal Home Loan Bank 0.085% 5/24/13 | $ | 2,227,409 | 2,227,395 | |||
2,227,395 | ||||||
Repurchase Agreements – 1.29% | ||||||
Bank of America 0.11%, dated 4/30/13, to be | ||||||
repurchased on 5/1/13, repurchase price $4,554,584 | ||||||
(collateralized by U.S. Government obligations 4.50% | ||||||
5/15/38; market value $4,645,662) | 4,554,570 | 4,554,570 | ||||
BNP Paribas 0.14%, dated 4/30/13, to be | ||||||
repurchased on 5/1/13, repurchase price | ||||||
$13,441,482 (collateralized by U.S. Government | ||||||
obligations 0.25%-0.875% 3/31/15–1/31/17; | ||||||
market value $13,710,260) | 13,441,430 | 13,441,430 | ||||
17,996,000 | ||||||
≠U.S. Treasury Obligations – 0.92% | ||||||
U.S. Treasury Bills | ||||||
0.03% 5/30/13 | 8,341,285 | 8,341,151 | ||||
0.065% 5/9/13 | 4,442,439 | 4,442,408 | ||||
12,783,559 | ||||||
Total Short-Term Investments (cost $33,006,762) | 33,006,954 |
6
Principal amount | Value | ||||||
Total Value of Securities Before Securities | |||||||
Lending Collateral – 99.40% | |||||||
(cost $1,038,259,705) | $ | 1,381,641,656 | |||||
Number of shares | |||||||
**Securities Lending Collateral – 0.00% | |||||||
Investment Companies | |||||||
†@Mellon GSL Reinvestment Trust II | 703,107 | 0 | |||||
Total Securities Lending Collateral (cost $703,107) | 0 | ||||||
Total Value of Securities – 99.40% | |||||||
(cost $1,038,962,812) | 1,381,641,656 | © | |||||
**Obligation to Return Securities | |||||||
Lending Collateral – (0.05%) | (703,107 | ) | |||||
Receivables and Other Assets | |||||||
Net of Other Liabilities – 0.65% | 8,982,875 | ||||||
Net Assets Applicable to 68,680,118 | |||||||
Shares Outstanding – 100.00% | $ | 1,389,921,424 | |||||
Net Asset Value – Delaware U.S. Growth Fund | |||||||
Class A ($204,595,486 / 10,549,106 Shares) | $19.39 | ||||||
Net Asset Value – Delaware U.S. Growth Fund | |||||||
Class B ($1,773,394 / 106,717 Shares) | $16.62 | ||||||
Net Asset Value – Delaware U.S. Growth Fund | |||||||
Class C ($49,247,116 / 2,733,921 Shares) | $18.01 | ||||||
Net Asset Value – Delaware U.S. Growth Fund | |||||||
Class R ($18,891,645 / 997,513 Shares) | $18.94 | ||||||
Net Asset Value – Delaware U.S. Growth Fund | |||||||
Institutional Class ($1,115,413,783 / 54,292,861 Shares) | $20.54 | ||||||
Components of Net Assets at April 30, 2013: | |||||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 1,161,980,075 | |||||
Undistributed net investment income | 1,859,215 | ||||||
Accumulated net realized loss on investments | (116,596,710 | ) | |||||
Net unrealized appreciation of investments | 342,678,844 | ||||||
Total net assets | $ | 1,389,921,424 |
7
Statement of net assets
Delaware U.S. Growth Fund
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
† | Non income producing security. |
* | Fully or partially on loan. |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 8 in “Notes to financial statements” for additional information on securities lending collateral. |
@ | Illiquid security. At April 30, 2013, the aggregate value of illiquid securities was $0, which represented 0.00% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
© | Includes $158,573 of securities loaned. |
Net Asset Value and Offering Price Per Share – | ||
Delaware U.S. Growth Fund | ||
Net asset value Class A (A) | $ | 19.39 |
Sales charges (5.75% of offering price) (B) | 1.18 | |
Offering price | $ | 20.57 |
(A) | Net asset value per share, as illustrated, is the amount which would be paid upon redemption or repurchase of shares. | |
(B) | See the current prospectus for purchases of $50,000 or more. |
ADR — American Depositary Receipt
See accompanying notes, which are an integral part of the financial statements.
8
Statement of operations | |
Delaware U.S. Growth Fund | Six Months Ended April 30, 2013 (Unaudited) |
Investment Income: | |||||||
Dividends | $ | 9,153,156 | |||||
Securities lending income | 367 | ||||||
Interest | 13,733 | ||||||
Foreign tax withheld | (215,860 | ) | $ | 8,951,396 | |||
Expenses: | |||||||
Management fees | 3,753,102 | ||||||
Dividend disbursing and transfer agent fees and expenses | 997,869 | ||||||
Distribution expenses – Class A | 256,482 | ||||||
Distribution expenses – Class B | 10,191 | ||||||
Distribution expenses – Class C | 196,233 | ||||||
Distribution expenses – Class R | 46,988 | ||||||
Accounting and administration expenses | 238,467 | ||||||
Registration fees | 78,108 | ||||||
Reports and statements to shareholders | 52,151 | ||||||
Legal fees | 38,150 | ||||||
Trustees’ fees | 28,068 | ||||||
Audit and tax | 22,470 | ||||||
Custodian fees | 14,208 | ||||||
Insurance fees | 8,717 | ||||||
Dues and services | 6,575 | ||||||
Consulting fees | 5,877 | ||||||
Trustees’ expenses | 2,088 | ||||||
Pricing fees | 1,450 | 5,757,194 | |||||
Less fees waived | (21,388 | ) | |||||
Less waived distribution expenses – Class A | (42,747 | ) | |||||
Less waived distribution expenses – Class R | (7,831 | ) | |||||
Less expense paid indirectly | (374 | ) | |||||
Total operating expenses | 5,684,854 | ||||||
Net Investment Income | 3,266,542 | ||||||
Net Realized and Unrealized Gain: | |||||||
Net realized gain on investments | 33,537,436 | ||||||
Net change in unrealized appreciation (depreciation) | |||||||
of investments | 104,769,097 | ||||||
Net Realized and Unrealized Gain | 138,306,533 | ||||||
Net Increase in Net Assets Resulting from Operations | $ | 141,573,075 |
See accompanying notes, which are an integral part of the financial statements.
9
Statements of changes in net assets
Delaware U.S. Growth Fund
Six Months | Year | ||||||
Ended | Ended | ||||||
4/30/13 | 10/31/12 | ||||||
(Unaudited) | |||||||
Increase (Decrease) in Net Assets from Operations: | |||||||
Net investment income (loss) | $ | 3,266,542 | $ | (7,753 | ) | ||
Net realized gain | 33,537,436 | 15,012,947 | |||||
Net change in unrealized appreciation (depreciation) | 104,769,097 | 93,577,399 | |||||
Net increase in net assets resulting from operations | 141,573,075 | 108,582,593 | |||||
Dividends and Distributions to Shareholders from: | |||||||
Net investment income: | |||||||
Institutional Class | (1,407,327 | ) | (762,634 | ) | |||
(1,407,327 | ) | (762,634 | ) | ||||
Capital Share Transactions: | |||||||
Proceeds from shares sold: | |||||||
Class A | 66,491,103 | 97,179,803 | |||||
Class B | 55,599 | 11,237 | |||||
Class C | 17,101,025 | 18,695,774 | |||||
Class R | 11,993,795 | 10,559,111 | |||||
Institutional Class | 195,306,770 | 381,972,084 | |||||
Net asset value of shares issued upon reinvestment | |||||||
of dividends and distributions: | |||||||
Institutional Class | 1,281,746 | 611,918 | |||||
292,230,038 | 509,029,927 |
10
Six Months | Year | ||||||
Ended | Ended | ||||||
4/30/13 | 10/31/12 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares redeemed: | |||||||
Class A | $ | (27,622,364 | ) | $ | (23,402,778 | ) | |
Class B | (778,717 | ) | (1,473,929 | ) | |||
Class C | (3,320,354 | ) | (3,249,329 | ) | |||
Class R | (6,011,213 | ) | (1,429,661 | ) | |||
Institutional Class | (118,035,381 | ) | (116,061,003 | ) | |||
(155,768,029 | ) | (145,616,700 | ) | ||||
Increase in net assets derived from capital | |||||||
share transactions | 136,462,009 | 363,413,227 | |||||
Net Increase in Net Assets | 276,627,757 | 471,233,186 | |||||
Net Assets: | |||||||
Beginning of period | 1,113,293,667 | 642,060,481 | |||||
End of period (including undistributed net investment | |||||||
income of $1,859,215 and $—, respectively) | $ | 1,389,921,424 | $ | 1,113,293,667 |
See accompanying notes, which are an integral part of the financial statements.
11
Financial highlights
Delaware U.S. Growth Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income (loss)2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
12
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$17.310 | $14.960 | $13.450 | $11.100 | $9.380 | $15.760 | |||||||||||||||
0.033 | (0.031 | ) | 0.006 | (0.038 | ) | 0.001 | (0.019 | ) | ||||||||||||
2.047 | 2.381 | 1.504 | 2.388 | 1.719 | (6.361 | ) | ||||||||||||||
2.080 | 2.350 | 1.510 | 2.350 | 1.720 | (6.380 | ) | ||||||||||||||
$19.390 | $17.310 | $14.960 | $13.450 | $11.100 | $9.380 | |||||||||||||||
12.02% | 15.71% | 11.23% | 21.17% | 18.34% | (40.49% | ) | ||||||||||||||
$204,595 | $146,112 | $60,615 | $89,259 | $128,702 | $127,819 | |||||||||||||||
1.10% | 1.10% | 1.10% | 1.07% | 1.00% | 1.01% | |||||||||||||||
1.15% | 1.16% | 1.21% | 1.26% | 1.31% | 1.18% | |||||||||||||||
0.36% | (0.19% | ) | 0.04% | (0.31% | ) | 0.00% | (0.15% | ) | ||||||||||||
0.31% | (0.25% | ) | (0.07% | ) | (0.50% | ) | (0.31% | ) | (0.32% | ) | ||||||||||
11% | 20% | 25% | 22% | 30% | 35% |
13
Financial highlights
Delaware U.S. Growth Fund Class B
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment loss2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
14
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$14.880 | $12.960 | $11.740 | $9.760 | $8.310 | $14.070 | |||||||||||||||
(0.031 | ) | (0.134 | ) | (0.090 | ) | (0.114 | ) | (0.058 | ) | (0.106 | ) | |||||||||
1.771 | 2.054 | 1.310 | 2.094 | 1.508 | (5.654 | ) | ||||||||||||||
1.740 | 1.920 | 1.220 | 1.980 | 1.450 | (5.760 | ) | ||||||||||||||
$16.620 | $14.880 | $12.960 | $11.740 | $9.760 | $8.310 | |||||||||||||||
11.69% | 14.81% | 10.39% | 20.29% | 17.45% | (40.94% | ) | ||||||||||||||
$1,773 | $2,271 | $3,288 | $4,428 | $5,564 | $8,352 | |||||||||||||||
1.85% | 1.85% | 1.85% | 1.82% | 1.75% | 1.76% | |||||||||||||||
1.85% | 1.86% | 1.91% | 1.96% | 2.01% | 1.88% | |||||||||||||||
(0.39% | ) | (0.94% | ) | (0.71% | ) | (1.06% | ) | (0.75% | ) | (0.90% | ) | |||||||||
(0.39% | ) | (0.95% | ) | (0.77% | ) | (1.20% | ) | (1.01% | ) | (1.02% | ) | |||||||||
11% | 20% | 25% | 22% | 30% | 35% |
15
Financial highlights
Delaware U.S. Growth Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment loss2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
16
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$16.130 | $14.050 | $12.720 | $10.580 | $9.010 | $15.250 | |||||||||||||||
(0.033 | ) | (0.146 | ) | (0.098 | ) | (0.123 | ) | (0.065 | ) | (0.115 | ) | |||||||||
1.913 | 2.226 | 1.428 | 2.263 | 1.635 | (6.125 | ) | ||||||||||||||
1.880 | 2.080 | 1.330 | 2.140 | 1.570 | (6.240 | ) | ||||||||||||||
$18.010 | $16.130 | $14.050 | $12.720 | $10.580 | $9.010 | |||||||||||||||
11.66% | 14.80% | 10.46% | 20.23% | 17.43% | (40.92% | ) | ||||||||||||||
$49,247 | $31,103 | $13,456 | $12,535 | $13,112 | $14,536 | |||||||||||||||
1.85% | 1.85% | 1.85% | 1.82% | 1.75% | 1.76% | |||||||||||||||
1.85% | 1.86% | 1.91% | 1.96% | 2.01% | 1.88% | |||||||||||||||
(0.39% | ) | (0.94% | ) | (0.71% | ) | (1.06% | ) | (0.75% | ) | (0.90% | ) | |||||||||
(0.39% | ) | (0.95% | ) | (0.77% | ) | (1.20% | ) | (1.01% | ) | (1.02% | ) | |||||||||
11% | 20% | 25% | 22% | 30% | 35% |
17
Financial highlights
Delaware U.S. Growth Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income (loss)2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects a waiver by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
18
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$16.920 | $14.660 | $13.210 | $10.930 | $9.260 | $15.600 | |||||||||||||||
0.010 | (0.073 | ) | (0.030 | ) | (0.067 | ) | (0.022 | ) | (0.050 | ) | ||||||||||
2.010 | 2.333 | 1.480 | 2.347 | 1.692 | (6.290 | ) | ||||||||||||||
2.020 | 2.260 | 1.450 | 2.280 | 1.670 | (6.340 | ) | ||||||||||||||
$18.940 | $16.920 | $14.660 | $13.210 | $10.930 | $9.260 | |||||||||||||||
11.94% | 15.42% | 10.98% | 20.86% | 18.03% | (40.64% | ) | ||||||||||||||
$18,892 | $11,202 | $1,697 | $2,375 | $2,336 | $2,055 | |||||||||||||||
1.35% | 1.35% | 1.35% | 1.32% | 1.25% | 1.26% | |||||||||||||||
1.45% | 1.46% | 1.51% | 1.56% | 1.61% | 1.48% | |||||||||||||||
0.11% | (0.44% | ) | (0.21% | ) | (0.56% | ) | (0.25% | ) | (0.40% | ) | ||||||||||
0.01% | (0.55% | ) | (0.37% | ) | (0.80% | ) | (0.61% | ) | (0.62% | ) | ||||||||||
11% | 20% | 25% | 22% | 30% | 35% |
19
Financial highlights
Delaware U.S. Growth Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income (loss)2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 The average shares outstanding method has been applied for per share information. |
3 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
20
Six Months Ended | Year Ended | ||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | ||||||||||||||
(Unaudited) | |||||||||||||||||||
$18.340 | $15.830 | $14.220 | $11.710 | $9.890 | $16.580 | ||||||||||||||
0.058 | 0.011 | 0.045 | (0.008 | ) | 0.024 | 0.014 | |||||||||||||
2.170 | 2.520 | 1.587 | 2.527 | 1.813 | (6.704 | ) | |||||||||||||
2.228 | 2.531 | 1.632 | 2.519 | 1.837 | (6.690 | ) | |||||||||||||
(0.028 | ) | (0.021 | ) | (0.022 | ) | (0.009 | ) | (0.017 | ) | — | |||||||||
(0.028 | ) | (0.021 | ) | (0.022 | ) | (0.009 | ) | (0.017 | ) | — | |||||||||
$20.540 | $18.340 | $15.830 | $14.220 | $11.710 | $9.890 | ||||||||||||||
12.17% | 16.01% | 11.48% | 21.42% | 18.48% | (40.35% | ) | |||||||||||||
$1,115,414 | $922,606 | $563,004 | $477,361 | $460,756 | $542,554 | ||||||||||||||
0.85% | 0.85% | 0.85% | 0.82% | 0.75% | 0.76% | ||||||||||||||
0.85% | 0.86% | 0.91% | 0.96% | 1.01% | 0.88% | ||||||||||||||
0.61% | 0.06% | 0.29% | (0.06% | ) | 0.25% | 0.10% | |||||||||||||
0.61% | 0.05% | 0.23% | (0.20% | ) | (0.01% | ) | (0.02% | ) | |||||||||||
11% | 20% | 25% | 22% | 30% | 35% |
21
Notes to financial statements | |
Delaware U.S. Growth Fund | April 30, 2013 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as a Delaware statutory trust and offers four series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities Fund, Delaware International Bond Fund and Delaware U.S. Growth Fund. These financial statements and the related notes pertain to Delaware U.S. Growth Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class B, Class C, Class R and Institutional Class shares. Class A shares are sold with a 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 be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek long-term capital appreciation by investing in equity securities of companies believed to have the potential for sustainable free cash flow growth.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used, which approximates fair value. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad
22
market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal Income Taxes — No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2009–Oct. 31, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on April 30, 2013.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated 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
23
Notes to financial statements
Delaware U.S. Growth Fund
1. Significant Accounting Policies (continued)
basis. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all non-rebatable tax withholdings. Withholding taxes on foreign dividends have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares and pays distributions from net investment income and net realized gain on investments, if any, annually and may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. Such commission rebates are included in realized gain on investments in the accompanying financial statements and totaled $4,685 for the six months ended April 30, 2013. 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 six months ended April 30, 2013.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which are used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2013, the Fund earned $374 under this agreement.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.65% on the first $500 million of average daily net assets of the Fund, 0.60% on the next $500 million, 0.55% on the next $1.5 billion and 0.50% on the average daily net assets in excess $2.5 billion.
DMC has contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan fees, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) do not exceed 0.85% of average daily net assets of the Fund through Feb. 28, 2014. This expense waiver and reimbursement applies only to expenses paid directly to the Fund and may only be terminated by agreement of DMC and the Fund.
24
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, 2013, the Fund was charged $29,820 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee of 0.30% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class B and Class C shares and 0.60% of the average daily net assets of the Class R shares. Institutional Class shares pay no distribution and services expenses. DDLP has contracted to limit the Class A and Class R shares’ 12b-1 fees through Feb. 28, 2014 to no more than 0.25% and 0.50%, of its respective average daily net assets. This expense waiver and reimbursement applies only to expenses paid directly to the Fund and may only be terminated by the agreement of DMC and the Fund.
At April 30, 2013, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 666,513 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | 29,993 | ||
Distribution fees payable to DDLP | 88,689 | ||
Other expenses payable to DMC and affiliates* | 16,047 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Expenses include items such as printing of shareholder reports, legal and tax services, registration fees and trustees’ fees.
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates’ employees. For the six months ended April 30, 2013, the Fund was charged $19,608 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2013, DDLP earned $42,819 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2013, DDLP received gross CDSC commissions of $0, $96, and $1,286 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.
25
Notes to financial statements
Delaware U.S. Growth Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
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, 2013, the Fund made purchases of $247,468,529 and sales of $129,929,029 of investment securities other than short-term investments.
At April 30, 2013, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2013, the cost of investments was $1,047,976,270. At April 30, 2013, net unrealized appreciation was $333,665,386, of which $348,680,748 related to unrealized appreciation of investments and $15,015,362 related to unrealized depreciation of investments.
U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three level hierarchy of inputs is summarized below.
Level 1 | – | inputs are quoted prices in active markets for identical investments (e.g., equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) |
Level 2 | – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
Level 3 | – | inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
26
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of April 30, 2013:
Level 1 | Level 2 | Level 3 | Total | ||||||||||
Common Stock | $ | 1,346,069,427 | $ | — | $— | $ | 1,346,069,427 | ||||||
Warrant | 2,565,275 | — | — | 2,565,275 | |||||||||
Short-Term Investments | — | 33,006,954 | — | 33,006,954 | |||||||||
Total | $ | 1,348,634,702 | $ | 33,006,954 | $— | $ | 1,381,641,656 |
The securities deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
During the six months ended April 30, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
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. GAAP. 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, 2013 and the year ended Oct. 31, 2012 was as follows:
Six Months Ended | Year Ended | ||||
4/30/13* | 10/31/12 | ||||
Ordinary income | $1,407,327 | $ | 762,634 |
*Tax information for the six months ended April 30, 2013 is an estimate and the tax character of dividends and distributions may be redesignated at fiscal year end.
27
Notes to financial statements
Delaware U.S. Growth Fund
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, 2013, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 1,161,980,075 | ||
Undistributed ordinary income | 1,859,215 | |||
Realized gains 11/1/12–4/30/13 | 33,311,730 | |||
Capital loss carryforwards as of 10/31/12 | (140,894,982 | ) | ||
Unrealized appreciation | 333,665,386 | |||
Net assets | $ | 1,389,921,424 |
The difference between book basis and tax basis components of net assets is 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 Oct. 31, 2012 will expire as follows: $140,894,982 expires in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the Act) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
For the six months ended April 30, 2013, the Fund had capital gains of $33,311,730, which may reduce the capital loss carryforwards.
28
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
4/30/13 | 10/31/12 | |||||
Shares sold: | ||||||
Class A | 3,608,620 | 5,786,607 | ||||
Class B | 3,488 | 782 | ||||
Class C | 1,001,285 | 1,177,946 | ||||
Class R | 679,152 | 632,605 | ||||
Institutional Class | 9,988,127 | 21,318,038 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Institutional Class | 69,723 | 38,269 | ||||
15,350,395 | 28,954,247 | |||||
Shares redeemed: | ||||||
Class A | (1,502,797 | ) | (1,394,763 | ) | ||
Class B | (49,355 | ) | (101,851 | ) | ||
Class C | (195,409 | ) | (207,560 | ) | ||
Class R | (343,708 | ) | (86,226 | ) | ||
Institutional Class | (6,081,265 | ) | (6,597,075 | ) | ||
(8,172,534 | ) | (8,387,475 | ) | |||
Net increase | 7,177,861 | 20,566,772 |
For the six months ended April 30, 2013 and the year ended Oct. 31, 2012, 21,251 Class B shares were converted to 18,236 Class A shares valued at $334,694 and 53,054 Class B shares were converted to 45,786 Class A shares valued at $773,729, 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.
7. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $125,000,000 revolving line of credit to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement expired on Nov. 13, 2012.
29
Notes to financial statements
Delaware U.S. Growth Fund
7. Line of Credit (continued)
On Nov. 13, 2012, the Fund, along with the other Participants, entered into an amendment to the agreement for a $125,000,000 revolving line of credit. The agreement is to be used as described above and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of April 30, 2013 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 The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. In Oct. 2008, BNY Mellon transferred certain distressed securities from the Fund’s previous collateral investment pool into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to
30
recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pool’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool that is equal in amount to the collateral the fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
At April 30, 2013, the value of the securities on loan was $158,573, for which cash collateral was received and invested in accordance with the Lending Agreement. At April 30, 2013, the value of invested collateral was $0. These investments are presented on the statement of net assets under the caption “Securities Lending Collateral.”
9. Credit and Market Risk
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, 2013, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
10. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
11. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to April 30, 2013 that would require recognition or disclosure in the Fund’s financial statements.
31
About the organization
Board of trustees | |||
Patrick P. Coyne Thomas L. Bennett | Joseph W. Chow John A. Fry Anthony D. Knerr | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus |
This semiannual report is for the information of Delaware U.S. Growth Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawareinvestments.com. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Fund’s Schedule of Investments are available without charge on the Fund’s website at delawareinvestments.com. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund’s website at delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
32
Semiannual report Delaware International Bond Fund April 30, 2013 Fixed income mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware International Bond Fund at delawareinvestments.com.
Manage your investments online |
|
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
Investments in Delaware International Bond Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Security type/country allocation | 3 |
Statement of net assets | 5 |
Statement of operations | 18 |
Statements of changes in net assets | 20 |
Financial highlights | 22 |
Notes to financial statements | 27 |
About the organization | 44 |
Unless otherwise noted, views expressed herein are current as of April 30, 2013, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from November 1, 2012 to April 30, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2012 to April 30, 2013.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware International Bond Fund
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||||||||
11/1/12 | 4/30/13 | Expense Ratio | 11/1/12 to 4/30/13* | ||||||||||||||
Actual Fund return† | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 988.00 | 1.10 | % | $5.42 | ||||||||||
Class C | 1,000.00 | 985.60 | 1.85 | % | 9.11 | ||||||||||||
Class R | 1,000.00 | 986.90 | 1.35 | % | 6.65 | ||||||||||||
Institutional Class | 1,000.00 | 989.30 | 0.85 | % | 4.19 | ||||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.34 | 1.10 | % | $5.51 | ||||||||||
Class C | 1,000.00 | 1,015.62 | 1.85 | % | 9.25 | ||||||||||||
Class R | 1,000.00 | 1,018.10 | 1.35 | % | 6.76 | ||||||||||||
Institutional Class | 1,000.00 | 1,020.58 | 0.85 | % | 4.26 |
*“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).
†Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.
2
Security type/country allocation | |
Delaware International Bond Fund | As of April 30, 2013 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Security type/country | Percentage of net assets | |
Commercial Mortgage-Backed Security | 0.06 | % |
Corporate Bonds | 53.76 | % |
Australia | 1.96 | % |
Bermuda | 1.63 | % |
Brazil | 4.34 | % |
Canada | 3.78 | % |
Cayman Islands | 2.27 | % |
Chile | 1.08 | % |
Colombia | 0.26 | % |
France | 2.83 | % |
Ireland | 4.08 | % |
Italy | 0.86 | % |
Luxembourg | 5.05 | % |
Mexico | 3.21 | % |
Netherlands | 4.94 | % |
Panama | 0.46 | % |
Qatar | 0.86 | % |
Spain | 1.32 | % |
United Kingdom | 6.49 | % |
United States | 8.10 | % |
Venezuela | 0.24 | % |
Regional Bonds | 6.02 | % |
Australia | 4.89 | % |
Canada | 1.13 | % |
Sovereign Bonds | 33.09 | % |
Belgium | 3.46 | % |
Germany | 0.00 | % |
Indonesia | 1.11 | % |
Ireland | 1.93 | % |
Italy | 3.15 | % |
Malaysia | 0.61 | % |
Mexico | 4.48 | % |
Panama | 0.84 | % |
Paraguay | 1.11 | % |
Peru | 0.81 | % |
3
Security type/country allocation
Security type/country | Percentage of net assets | |
Sovereign Bonds (continued) | ||
Poland | 2.77 | % |
Portugal | 1.05 | % |
Russia | 0.15 | % |
South Africa | 2.39 | % |
Sri Lanka | 1.16 | % |
Sweden | 0.33 | % |
Turkey | 1.11 | % |
United Kingdom | 6.25 | % |
Uruguay | 0.38 | % |
Supranational Bank | 0.18 | % |
U.S. Treasury Obligations | 0.97 | % |
Short-Term Investments | 2.32 | % |
Total Value of Securities | 96.40 | % |
Receivables and Other Assets Net of Liabilities | 3.60 | % |
Total Net Assets | 100.00 | % |
4
Statement of net assets | |
Delaware International Bond Fund | April 30, 2013 (Unaudited) |
Principal amount° | Value (U.S. $) | |||||||
Commercial Mortgage-Backed Security – 0.06% | ||||||||
•# | FREMF Mortgage Trust Series 2012-K21 B 144A | |||||||
4.072% 7/25/45 | USD | 10,000 | $ | 10,568 | ||||
Total Commercial Mortgage-Backed | ||||||||
Security (cost $10,161) | 10,568 | |||||||
ΔCorporate Bonds – 53.76% | ||||||||
Australia – 1.96% | ||||||||
# | APT Pipelines 144A 3.875% 10/11/22 | 70,000 | 70,800 | |||||
BHP Billiton Finance USA 3.25% 11/21/21 | 105,000 | 112,702 | ||||||
# | Woodside Finance 144A 8.75% 3/1/19 | 60,000 | 80,397 | |||||
# | Woolworths 144A 4.55% 4/12/21 | 85,000 | 96,823 | |||||
360,722 | ||||||||
Bermuda – 1.63% | ||||||||
# | Digicel Group 144A 10.50% 4/15/18 | 200,000 | 222,500 | |||||
Weatherford Bermuda 5.125% 9/15/20 | 70,000 | 78,049 | ||||||
300,549 | ||||||||
Brazil – 4.34% | ||||||||
# | Banco Pactual 144A 4.00% 1/16/20 | 200,000 | 192,500 | |||||
# | Brasil Telecom 144A 5.75% 2/10/22 | 202,000 | 213,615 | |||||
Vale Overseas 6.25% 1/23/17 | 140,000 | 162,328 | ||||||
# | Votorantim Cimentos 144A 7.25% 4/5/41 | 200,000 | 229,500 | |||||
797,943 | ||||||||
Canada – 3.78% | ||||||||
Barrick Gold | ||||||||
2.90% 5/30/16 | 115,000 | 119,880 | ||||||
3.85% 4/1/22 | 45,000 | 45,269 | ||||||
Canadian Natural Resources | ||||||||
3.45% 11/15/21 | 45,000 | 48,482 | ||||||
6.25% 3/15/38 | 25,000 | 31,171 | ||||||
Rogers Communications 3.00% 3/15/23 | 125,000 | 128,664 | ||||||
Talisman Energy 5.50% 5/15/42 | 25,000 | 27,159 | ||||||
Teck Resources 4.75% 1/15/22 | 130,000 | 140,570 | ||||||
• | TransCanada Pipelines 6.35% 5/15/67 | 145,000 | 154,939 | |||||
696,134 |
5
Statement of net assets
Delaware International Bond Fund
Principal amount° | Value (U.S. $) | |||||||
ΔCorporate Bonds (continued) | ||||||||
Cayman Islands – 2.27% | ||||||||
Baidu 3.50% 11/28/22 | USD | 200,000 | $ | 202,211 | ||||
Noble Holding International 3.95% 3/15/22 | 125,000 | 131,002 | ||||||
Transocean 6.375% 12/15/21 | 70,000 | 83,991 | ||||||
417,204 | ||||||||
Chile – 1.08% | ||||||||
# | Telefonica Chile 144A 3.875% 10/12/22 | 200,000 | 198,195 | |||||
198,195 | ||||||||
Colombia – 0.26% | ||||||||
Bancolombia 5.125% 9/11/22 | 16,000 | 16,424 | ||||||
Ecopetrol 7.625% 7/23/19 | 25,000 | 32,000 | ||||||
48,424 | ||||||||
France – 2.83% | ||||||||
France Telecom 4.125% 9/14/21 | 85,000 | 93,145 | ||||||
# | GDF Suez 144A 1.625% 10/10/17 | 50,000 | 50,825 | |||||
# | Pernod-Ricard 144A 4.45% 1/15/22 | 150,000 | 167,636 | |||||
Total Capital International 2.875% 2/17/22 | 125,000 | 131,140 | ||||||
# | Vivendi 144A 6.625% 4/4/18 | 65,000 | 76,904 | |||||
519,650 | ||||||||
Ireland – 4.08% | ||||||||
# | Ardagh Packaging Finance 144A 7.00% 11/15/20 | 200,000 | 212,000 | |||||
# | Nara Cable Funding 144A 8.875% 12/1/18 | 100,000 | 107,500 | |||||
# | Rosneft Oil 144A 4.199% 3/6/22 | 200,000 | 201,500 | |||||
# | VimpelCom 144A 7.748% 2/2/21 | 200,000 | 229,250 | |||||
750,250 | ||||||||
Italy – 0.86% | ||||||||
# | ENI 144A 4.15% 10/1/20 | 150,000 | 158,318 | |||||
158,318 | ||||||||
Luxembourg – 5.05% | ||||||||
ArcelorMittal 6.60% 3/1/21 | 80,000 | 84,893 | ||||||
# | Cosan Luxembourg 144A 5.00% 3/14/23 | 200,000 | 204,200 | |||||
Covidien International Finance 2.80% 6/15/15 | 110,000 | 114,878 | ||||||
# | Intelsat Luxembourg 144A 7.75% 6/1/21 | 200,000 | 211,499 | |||||
# | Schlumberger Investment 144A 3.30% 9/14/21 | 110,000 | 119,547 | |||||
Tyco Electronics Group 3.50% 2/3/22 | 85,000 | 88,048 | ||||||
# | Wind Acquisition Finance 144A 7.25% 2/15/18 | 100,000 | 106,000 | |||||
929,065 |
6
Principal amount° | Value (U.S. $) | |||||||
ΔCorporate Bonds (continued) | ||||||||
Mexico – 3.21% | ||||||||
America Movil 3.75% 6/28/17 | EUR | 145,000 | $ | 209,901 | ||||
# | Banco Santander Mexico 144A 4.125% 11/9/22 | USD | 150,000 | 151,500 | ||||
# | Petroleos Mexicanos 144A 3.50% 1/30/23 | 20,000 | 20,400 | |||||
# | Tenedora Nemak 144A 5.50% 2/28/23 | 200,000 | 208,250 | |||||
590,051 | ||||||||
Netherlands – 4.94% | ||||||||
# | Carlson Wagonlit 144A 6.875% 6/15/19 | 200,000 | 213,000 | |||||
# | Deutsche Telekom International Finance 144A | |||||||
2.25% 3/6/17 | 150,000 | 154,166 | ||||||
# | Heineken 144A 3.40% 4/1/22 | 125,000 | 131,887 | |||||
Koninklijke Philips Electronics 3.75% 3/15/22 | 115,000 | 124,871 | ||||||
# | Myriad International Holdings 144A 6.375% 7/28/17 | 100,000 | 113,880 | |||||
•# | Rabobank 144A 11.00% 12/29/49 | 115,000 | 155,362 | |||||
Syngenta Finance 3.125% 3/28/22 | 15,000 | 15,818 | ||||||
908,984 | ||||||||
Panama – 0.46% | ||||||||
Carnival 1.875% 12/15/17 | 85,000 | 85,382 | ||||||
85,382 | ||||||||
Qatar – 0.86% | ||||||||
# | Ras Laffan Liquefied Natural Gas III 144A | |||||||
5.832% 9/30/16 | 145,425 | 157,423 | ||||||
157,423 | ||||||||
Spain – 1.32% | ||||||||
# | Cemex Espana 144A 9.25% 5/12/20 | 200,000 | 221,000 | |||||
Telefonica Emisiones 5.462% 2/16/21 | 20,000 | 22,094 | ||||||
243,094 | ||||||||
United Kingdom – 6.49% | ||||||||
Abbey National Treasury Services 4.00% 4/27/16 | 50,000 | 53,750 | ||||||
# | Algeco Scotsman Global Finance 144A 8.50% 10/15/18 | 200,000 | 217,000 | |||||
# | BG Energy Capital 144A 4.00% 12/9/20 | 100,000 | 112,012 | |||||
# | CEVA Group 144A 8.375% 12/1/17 | 125,000 | 125,313 | |||||
Ensco 4.70% 3/15/21 | 105,000 | 119,631 | ||||||
HSBC Holdings 6.25% 3/19/18 | EUR | 100,000 | 159,493 | |||||
# | Ineos Finance 144A 8.375% 2/15/19 | USD | 100,000 | 113,125 | ||||
Rio Tinto Finance USA 1.625% 8/21/17 | 100,000 | 101,468 |
7
Statement of net assets
Delaware International Bond Fund
Principal amount° | Value (U.S. $) | ||||||
ΔCorporate Bonds (continued) | |||||||
United Kingdom (continued) | |||||||
Virgin Media Secured Finance 6.50% 1/15/18 | USD | 100,000 | $ | 107,000 | |||
Vodafone Group 2.95% 2/19/23 | 85,000 | 85,720 | |||||
1,194,512 | |||||||
United States – 8.10% | |||||||
Anheuser-Busch InBev Worldwide 1.375% 7/15/17 | 65,000 | 65,938 | |||||
Burlington North Santa Fe 5.65% 5/1/17 | 30,000 | 35,188 | |||||
CenturyLink 6.45% 6/15/21 | 75,000 | 83,169 | |||||
Comcast 6.30% 11/15/17 | 75,000 | 91,890 | |||||
Commonwealth Edison 1.95% 9/1/16 | 45,000 | 46,676 | |||||
# | Crown Castle Towers 144A 4.883% 8/15/20 | 35,000 | 40,458 | ||||
CSX 5.60% 5/1/17 | 70,000 | 81,671 | |||||
Dow Chemical 8.55% 5/15/19 | 30,000 | 40,500 | |||||
Enterprise Products Operating 6.30% 9/15/17 | 45,000 | 54,153 | |||||
• | Fifth Third Capital Trust IV 6.50% 4/15/37 | 55,000 | 55,378 | ||||
# | Freeport-McMoRan Copper & Gold 144A | ||||||
2.375% 3/15/18 | 55,000 | 55,459 | |||||
3.10% 3/15/20 | 10,000 | 10,078 | |||||
3.875% 3/15/23 | 10,000 | 10,100 | |||||
5.45% 3/15/43 | 10,000 | 10,182 | |||||
General Electric Capital 5.30% 2/11/21 | 40,000 | 46,545 | |||||
# | HD Supply 144A 7.50% 7/15/20 | 2,000 | 2,170 | ||||
JPMorgan Chase | |||||||
2.92% 9/19/17 | CAD | 100,000 | 101,285 | ||||
4.25% 11/2/18 | NZD | 30,000 | 25,620 | ||||
Kinder Morgan Energy Partners 6.00% 2/1/17 | USD | 20,000 | 23,294 | ||||
Kraft Foods Group 3.50% 6/6/22 | 20,000 | 21,365 | |||||
Laboratory Corporation of America Holdings | |||||||
2.20% 8/23/17 | 65,000 | 66,010 | |||||
Lowe’s 3.12% 4/15/22 | 30,000 | 31,760 | |||||
# | Lynx I 144A 5.375% 4/15/21 | 200,000 | 214,499 | ||||
Molson Coors Brewing 2.00% 5/1/17 | 60,000 | 61,860 | |||||
National Semiconductor 6.60% 6/15/17 | 55,000 | 66,763 | |||||
Noble Energy 4.15% 12/15/21 | 20,000 | 22,397 | |||||
SCANA 4.125% 2/1/22 | 15,000 | 15,991 | |||||
UDR 4.625% 1/10/22 | 15,000 | 16,924 | |||||
United Technologies 3.10% 6/1/22 | 15,000 | 15,991 | |||||
Vornado Realty 5.00% 1/15/22 | 15,000 | 17,036 | |||||
• | Wisconsin Energy 6.25% 5/15/67 | 55,000 | 60,004 | ||||
1,490,354 |
8
Principal amount° | Value (U.S. $) | |||||||
ΔCorporate Bonds (continued) | ||||||||
Venezuela – 0.24% | ||||||||
Petroleos de Venezuela 9.00% 11/17/21 | USD | 46,000 | $ | 43,585 | ||||
43,585 | ||||||||
Total Corporate Bonds (cost $9,472,112) | 9,889,839 | |||||||
ΔRegional Bonds – 6.02% | ||||||||
Australia – 4.89% | ||||||||
New South Wales Treasury 6.00% 3/1/22 | AUD | 352,000 | 423,685 | |||||
Queensland Treasury 6.00% 10/21/15 | AUD | 135,000 | 149,902 | |||||
Treasury of Victoria | ||||||||
5.50% 12/17/24 | AUD | 180,000 | 211,358 | |||||
6.00% 10/17/22 | AUD | 94,000 | 113,952 | |||||
898,897 | ||||||||
Canada – 1.13% | ||||||||
Quebec Province 4.25% 12/1/21 | CAD | 185,000 | 208,742 | |||||
208,742 | ||||||||
Total Regional Bonds (cost $1,089,574) | 1,107,639 | |||||||
ΔSovereign Bonds – 33.09% | ||||||||
Belgium – 3.46% | ||||||||
Belgian Government | ||||||||
4.25% 9/28/22 | EUR | 294,000 | 469,351 | |||||
4.25% 3/28/41 | EUR | 100,000 | 166,261 | |||||
635,612 | ||||||||
Germany – 0.00% | ||||||||
Deutschland Republic 2.50% 1/4/21 | EUR | 20 | 30 | |||||
30 | ||||||||
Indonesia – 1.11% | ||||||||
# | Indonesia Government International Bond 144A | |||||||
3.375% 4/15/23 | USD | 200,000 | 204,750 | |||||
204,750 | ||||||||
Ireland – 1.93% | ||||||||
Irish Government | ||||||||
3.90% 3/20/23 | EUR | 100,000 | 136,784 | |||||
4.50% 10/18/18 | EUR | 150,000 | 218,026 | |||||
354,810 |
9
Statement of net assets
Delaware International Bond Fund
Principal amount° | Value (U.S. $) | ||||||
ΔSovereign Bonds (continued) | |||||||
Italy – 3.15% | |||||||
Italy Buoni Poliennali Del Tesoro 5.50% 11/1/22 | EUR | 389,000 | $ | 579,788 | |||
579,788 | |||||||
Malaysia – 0.61% | |||||||
Malaysia Government 4.262% 9/15/16 | MYR | 330,000 | 112,836 | ||||
112,836 | |||||||
Mexico – 4.48% | |||||||
Mexican Bonos | |||||||
7.50% 6/3/27 | MXN | 4,433,000 | 466,878 | ||||
7.75% 5/29/31 | MXN | 2,256,000 | 245,436 | ||||
7.75% 11/13/42 | MXN | 1,000,000 | 112,242 | ||||
824,556 | |||||||
Panama – 0.84% | |||||||
Panama Government International Bond 6.70% 1/26/36 | USD | 110,000 | 153,615 | ||||
153,615 | |||||||
Paraguay – 1.11% | |||||||
# | Republic of Paraguay 144A 4.625% 1/25/23 | 200,000 | 205,000 | ||||
205,000 | |||||||
Peru – 0.81% | |||||||
Republic of Peru 7.125% 3/30/19 | 115,000 | 149,788 | |||||
149,788 | |||||||
Poland – 2.77% | |||||||
Poland Government 5.75% 10/25/21 | PLN | 1,349,000 | 509,939 | ||||
509,939 | |||||||
Portugal – 1.05% | |||||||
Portugese Obrigacoes do Tesouro 3.60% 10/15/14 | EUR | 145,000 | 193,698 | ||||
193,698 | |||||||
Russia – 0.15% | |||||||
Russia Eurobond 7.50% 3/31/30 | USD | 21,605 | 27,222 | ||||
27,222 | |||||||
South Africa – 2.39% | |||||||
Republic of South Africa 10.50% 12/21/26 | ZAR | 2,958,000 | 438,929 | ||||
438,929 | |||||||
Sri Lanka – 1.16% | |||||||
# | Republic of Sri Lanka 144A 5.875% 7/25/22 | 200,000 | 212,500 | ||||
212,500 |
10
Principal amount° | Value (U.S. $) | ||||||
ΔSovereign Bonds (continued) | |||||||
Sweden – 0.33% | |||||||
Swedish Government 3.00% 7/12/16 | SEK | 365,000 | $ | 60,053 | |||
60,053 | |||||||
Turkey – 1.11% | |||||||
Turkey Government 10.50% 1/15/20 | TRY | 295,000 | 204,946 | ||||
204,946 | |||||||
United Kingdom – 6.25% | |||||||
United Kingdom Treasury Gilt | |||||||
1.75% 1/22/17 | GBP | 65,000 | 105,809 | ||||
4.00% 3/7/22 | GBP | 212,000 | 397,422 | ||||
5.00% 3/7/25 | GBP | 314,200 | 646,265 | ||||
1,149,496 | |||||||
Uruguay – 0.38% | |||||||
Uruguay Government International Bond | |||||||
8.00% 11/18/22 | USD | 48,750 | 70,249 | ||||
70,249 | |||||||
Total Sovereign Bonds (cost $5,814,971) | 6,087,817 | ||||||
Supranational Bank – 0.18% | |||||||
Corp Andina de Fomento 4.375% 6/15/22 | 30,000 | 32,855 | |||||
Total Supranational Bank (cost $32,372) | 32,855 | ||||||
U.S. Treasury Obligations – 0.97% | |||||||
U.S Treasury Notes | |||||||
0.625% 4/30/18 | 45,000 | 44,891 | |||||
2.00% 2/15/23 | 130,000 | 133,819 | |||||
Total U.S Treasury Obligations (cost $174,771) | 178,710 | ||||||
Short-Term Investments – 2.32% | |||||||
≠ | Discount Note – 0.41% | ||||||
Federal Home Loan Bank 0.085% 5/24/13 | 75,923 | 75,923 | |||||
75,923 |
11
Statement of net assets
Delaware International Bond Fund
Principal amount° | Value (U.S. $) | ||||||||
Short-Term Investments (continued) | |||||||||
Repurchase Agreements – 1.64% | |||||||||
Bank of America 0.11%, dated 4/30/13, to | |||||||||
be repurchased on 5/1/13, repurchase price | |||||||||
$76,179 (collateralized by U.S. Government | |||||||||
obligations 4.50% 5/15/38; | |||||||||
market value $77,703) | USD | 76,179 | $ | 76,179 | |||||
BNP Paribas 0.14%, dated 4/30/13, to | |||||||||
be repurchased on 5/1/13, repurchase price | |||||||||
$224,822 (collateralized by U.S. Government | |||||||||
obligations 0.25%-0.875% 3/31/15-1/31/17; | |||||||||
market value $229,317) | 224,821 | 224,821 | |||||||
301,000 | |||||||||
≠U.S. Treasury Obligation – 0.27% | |||||||||
U.S Treasury Bill 0.03% 5/30/13 | 50,516 | 50,515 | |||||||
50,515 | |||||||||
Total Short-Term Investments (cost $427,434) | 427,438 | ||||||||
Total Value of Securities – 96.40% | |||||||||
(cost $17,021,395) | 17,734,866 | ||||||||
«Receivables and Other Assets Net of | |||||||||
Liabilities – 3.60% | 662,198 | ||||||||
Net Assets Applicable to 2,014,241 | |||||||||
Shares Outstanding – 100.00% | $ | 18,397,064 | |||||||
Net Asset Value – Delaware International Bond Fund | |||||||||
Class A ($17,127,731 / 1,875,180 Shares) | $9.13 | ||||||||
Net Asset Value – Delaware International Bond Fund | |||||||||
Class C ($1,033,267 / 113,215 Shares) | $9.13 | ||||||||
Net Asset Value – Delaware International Bond Fund | |||||||||
Class R ($102,309 / 11,205 Shares) | $9.13 | ||||||||
Net Asset Value – Delaware International Bond Fund | |||||||||
Institutional Class ($133,757 / 14,641 Shares) | $9.14 |
12
Components of Net Assets at April 30, 2013: | ||||
Shares of beneficial interest (unlimited authorization – no par) | $ | 17,857,318 | ||
Distributions in excess of net investment income | (53,650 | ) | ||
Accumulated net realized loss on investments | (207,279 | ) | ||
Net unrealized appreciation of investments and derivatives | 800,675 | |||
Total net assets | $ | 18,397,064 |
° | Principal amount is stated in the currency in which each security is denominated. |
• | Variable rate security. The rate shown is the rate as of April 30, 2013. Interest rates reset periodically. |
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At April 30, 2013, the aggregate value of Rule 144A securities was $6,219,591, which represented 33.81% of the Fund’s net assets. See Note 11 in “Notes to financial statements.” |
Δ | Securities have been classified by country of origin. |
≠ | The rate shown is the effective yield at the time of purchase. |
« | Includes $11,450 cash collateral for derivatives and foreign currency valued at $205,419 with a cost of $205,113. |
Net Asset Value and Offering Price Per Share – | |||
Delaware International Bond Fund | |||
Net asset value Class A (A) | $ | 9.13 | |
Sales charge (4.50% of offering price) (B) | 0.43 | ||
Offering price | $ | 9.56 |
(A) | Net asset value per share, as illustrated, is the amount that would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchase of $100,000 or more. |
13
Statement of net assets
Delaware International Bond Fund
The following foreign currency exchange contracts were outstanding at April 30, 2013:1 |
Foreign Currency Exchange Contracts
Unrealized | |||||||||||||||||||||
Appreciation | |||||||||||||||||||||
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | (Depreciation) | |||||||||||||||||
BAML | AUD | (626,776 | ) | USD | 650,111 | 5/10/13 | $ | 853 | |||||||||||||
BAML | BRL | 145,762 | USD | (72,249 | ) | 5/10/13 | 518 | ||||||||||||||
BAML | CAD | (197,388 | ) | USD | 194,045 | 5/10/13 | 1,827 | ||||||||||||||
BAML | EUR | 2,584,112 | USD | (3,372,842 | ) | 5/10/13 | 30,525 | ||||||||||||||
BAML | GBP | 58,584 | USD | (90,770 | ) | 5/10/13 | 228 | ||||||||||||||
BAML | INR | 2,945,009 | USD | (54,893 | ) | 5/10/13 | (146 | ) | |||||||||||||
BAML | JPY | 300,336,185 | USD | (3,053,691 | ) | 5/10/13 | 27,308 | ||||||||||||||
BAML | RUB | 6,226,000 | USD | (200,000 | ) | 5/17/13 | (672 | ) | |||||||||||||
BAML | SEK | 696,457 | USD | (108,160 | ) | 5/10/13 | (706 | ) | |||||||||||||
BAML | ZAR | 899,720 | USD | (100,000 | ) | 5/2/13 | 236 | ||||||||||||||
BAML | ZAR | (3,816,862 | ) | USD | 425,424 | 5/10/13 | 670 | ||||||||||||||
BNP | IDR | 3,534,522,075 | USD | (363,447 | ) | 5/10/13 | (143 | ) | |||||||||||||
CITI | PLN | (667,450 | ) | USD | 210,115 | 5/10/13 | (945 | ) | |||||||||||||
CITI | SEK | 323,990 | USD | (50,390 | ) | 5/10/13 | (402 | ) | |||||||||||||
HSBC | BRL | 361,393 | USD | (181,723 | ) | 5/10/13 | (1,309 | ) | |||||||||||||
HSBC | GBP | (64,161 | ) | USD | 98,139 | 5/10/13 | (1,521 | ) | |||||||||||||
MSC | AUD | (68,214 | ) | USD | 70,880 | 5/10/13 | 220 | ||||||||||||||
MSC | GBP | (65,333 | ) | USD | 100,005 | 5/10/13 | (1,476 | ) | |||||||||||||
MSC | INR | 36,683,495 | USD | (665,738 | ) | 5/10/13 | 16,196 | ||||||||||||||
TD | AUD | 175,000 | USD | (181,258 | ) | 5/10/13 | 19 | ||||||||||||||
TD | BRL | 702,625 | USD | (351,752 | ) | 5/10/13 | (989 | ) | |||||||||||||
TD | CAD | 411,088 | USD | (402,771 | ) | 5/10/13 | 5,175 | ||||||||||||||
TD | EUR | 100,000 | USD | (130,122 | ) | 5/10/13 | 1,582 | ||||||||||||||
TD | GBP | (50,000 | ) | USD | 76,410 | 5/10/13 | (1,254 | ) | |||||||||||||
TD | INR | 13,916,256 | USD | (254,134 | ) | 5/10/13 | 4,564 | ||||||||||||||
TD | JPY | (38,537,400 | ) | USD | 390,501 | 5/10/13 | (4,835 | ) | |||||||||||||
TD | MXN | 3,663,300 | USD | (300,000 | ) | 5/10/13 | 1,424 | ||||||||||||||
TD | NOK | 296,837 | USD | (51,620 | ) | 5/10/13 | (165 | ) | |||||||||||||
$ | 76,782 |
14
Futures Contract | |||||||||
Unrealized | |||||||||
Notional Cost | Appreciation | ||||||||
Contract to Buy (Sell) | (Proceeds) | Notional Value | Expiration Date | (Depreciation) | |||||
1 EUR BUXL 30 yr Bond | $173,547 | $182,555 | 6/11/13 | $9,008 |
The use of foreign currency exchange contracts and futures contracts involves elements of market risk and risks in excess of the amounts disclosed in the financial statements. The foreign currency exchange contracts and notional values presented above represents the Fund’s total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Fund’s net assets.
1See Note 9 in “Notes to financial statements.”
15
Statement of net assets
Delaware International Bond Fund
BAML — Bank of America Merrill Lynch
BNP — Banque Paribas
BRL — Brazilian Real
CAD — Canadian Dollar
CITI — Citigroup Global Markets
EUR — European Monetary Unit
GBP — British Pound Sterling
HSBC — Hong Kong Shanghai Bank
IDR — Indonesian Rupee
INR — Indian Rupee
JPY — Japanese Yen
MSC — Morgan Stanley Capital
MXN — Mexican Peso
MYR — Malaysian Ringgit
NOK — Norwegian Krone
NZD — New Zealand Dollar
PLN — Polish Zloty
RUB — Russian Ruble
SEK — Swedish Krona
TD — Toronto Dominion Bank
TRY — Turkish Lira
USD — United States Dollar
yr — Year
ZAR — South African Rand
See accompanying notes, which are an integral part of the financial statements.
16
Statement of operations | |
Delaware International Bond Fund | Six months ended April 30, 2013 (Unaudited) |
Investment Income: | |||||
Interest | $ | 299,431 | |||
Foreign tax withheld | (1,379 | ) | |||
298,052 | |||||
Expenses: | |||||
Management fees | 51,480 | ||||
Registration fees | 30,743 | ||||
Distribution expenses – Class A | 21,550 | ||||
Distribution expenses – Class C | 5,981 | ||||
Distribution expenses – Class R | 207 | ||||
Audit and tax | 9,756 | ||||
Reports and statements to shareholders | 7,677 | ||||
Legal fees | 6,471 | ||||
Dividend disbursing and transfer agent fees and expenses | 5,218 | ||||
Dues and services | 4,329 | ||||
Custodian fees | 3,707 | ||||
Accounting and administration expenses | 3,072 | ||||
Pricing fees | 2,742 | ||||
Trustees’ fees | 357 | ||||
Insurance fees | 133 | ||||
Consulting fees | 79 | ||||
Trustees’ expenses | 30 | ||||
153,532 | |||||
Less fees waived | (58,560 | ) | |||
Less waived distribution expenses – Class A | (3,592 | ) | |||
Less waived distribution expenses – Class R | (35 | ) | |||
Less expense paid indirectly | (5 | ) | |||
Total operating expenses | 91,340 | ||||
Net Investment Income | 206,712 |
18
Net Realized and Unrealized Gain (Loss): | |||||
Net realized gain (loss) on: | |||||
Investments | $ | 190,299 | |||
Foreign currencies | 23,896 | ||||
Foreign currency exchange contracts | (661,195 | ) | |||
Futures contracts | (70,355 | ) | |||
Swap contracts | (11,563 | ) | |||
Net realized loss | (528,918 | ) | |||
Net change in unrealized appreciation (depreciation) of: | |||||
Investments | 112,134 | ||||
Foreign currencies | 1,767 | ||||
Foreign currency exchange contracts | 74,657 | ||||
Futures contracts | 9,008 | ||||
Net change in unrealized appreciation (depreciation) | 197,566 | ||||
Net Realized and Unrealized Loss | (331,352 | ) | |||
Net Decrease in Net Assets Resulting from Operations | $ | (124,640 | ) |
See accompanying notes, which are an integral part of the financial statements.
19
Statements of changes in net assets
Delaware International Bond Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
4/30/13 | 10/31/12 | |||||||
(Unaudited) | ||||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 206,712 | $ | 309,175 | ||||
Net realized loss | (528,918 | ) | (69,290 | ) | ||||
Net change in unrealized appreciation (depreciation) | 197,566 | 436,946 | ||||||
Net increase (decrease) in net assets resulting | ||||||||
from operations | (124,640 | ) | 676,831 | |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (238,313 | ) | (2,570,576 | ) | ||||
Class C | (14,595 | ) | (44,741 | ) | ||||
Class R | (1,065 | ) | (399 | ) | ||||
Institutional Class | (2,280 | ) | (4,790 | ) | ||||
(256,253 | ) | (2,620,506 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 4,662,638 | 2,682,936 | ||||||
Class C | 55,131 | 1,100,808 | ||||||
Class R | 79,066 | 24,520 | ||||||
Institutional Class | 70,008 | 141,369 | ||||||
Net asset value of shares issued upon reinvestment | ||||||||
of dividends and distributions: | ||||||||
Class A | 233,568 | 2,564,714 | ||||||
Class C | 12,960 | 44,432 | ||||||
Class R | 1,065 | 399 | ||||||
Institutional Class | 1,830 | 4,790 | ||||||
5,116,266 | 6,563,968 |
20
Six Months | Year | |||||||
Ended | Ended | |||||||
4/30/13 | 10/31/12 | |||||||
(Unaudited) | ||||||||
Capital Share Transactions (continued): | ||||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (561,412 | ) | $ | (528,987 | ) | ||
Class C | (268,065 | ) | (21,111 | ) | ||||
Class R | (2,050 | ) | — | |||||
Institutional Class | (91,840 | ) | (3,937 | ) | ||||
(923,367 | ) | (554,035 | ) | |||||
Increase in net assets derived from capital share transactions | 4,192,899 | 6,009,933 | ||||||
Net Increase in Net Assets | 3,812,006 | 4,066,258 | ||||||
Net Assets: | ||||||||
Beginning of period | 14,585,058 | 10,518,800 | ||||||
End of period (including distributions in excess of | ||||||||
net investment income of $53,650 and | ||||||||
$53,747, respectively) | $ | 18,397,064 | $ | 14,585,058 |
See accompanying notes, which are an integral part of the financial statements.
21
Financial highlights
Delaware International Bond 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 income3 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Total dividends and distributions |
Net asset value, end of period |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 Effective July 28, 2011, the Fund received all of the assets and liabilities of the Delaware Pooled® Trust – The International Fixed Income Portfolio (Portfolio). The Class A shares financial highlights for the periods prior to July 28, 2011, reflect the performance of the Institutional Class shares of the Portfolio. Fees paid by the Portfolio were less than Class A share fees, and performance would have been lower if Class A fees were paid. See Note 2 in “Notes to financial statements.” |
3 The average shares outstanding method has been applied for per share information. |
See accompanying notes, which are an integral part of the financial statements.
22
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/131 | 10/31/12 | 10/31/112 | 10/31/102 | 10/31/092 | 10/31/082 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$9.390 | $11.690 | $12.140 | $12.430 | $11.570 | $11.740 | |||||||||||||||
0.121 | 0.239 | 0.269 | 0.279 | 0.876 | 0.265 | |||||||||||||||
(0.234 | ) | 0.190 | (0.124 | ) | 0.752 | 1.173 | 0.189 | |||||||||||||
(0.113 | ) | 0.429 | 0.145 | 1.031 | 2.049 | 0.454 | ||||||||||||||
(0.147 | ) | (2.729 | ) | (0.595 | ) | (1.321 | ) | (1.189 | ) | (0.624 | ) | |||||||||
(0.147 | ) | (2.729 | ) | (0.595 | ) | (1.321 | ) | (1.189 | ) | (0.624 | ) | |||||||||
$9.130 | $9.390 | $11.690 | $12.140 | $12.430 | $11.570 | |||||||||||||||
(1.20% | ) | 5.23% | 1.52% | 9.33% | 18.86% | 4.04% | ||||||||||||||
$17,128 | $13,130 | $10,337 | $21,358 | $19,538 | $29,815 | |||||||||||||||
1.10% | 1.10% | 0.72% | 0.60% | 0.60% | 0.60% | |||||||||||||||
1.89% | 2.94% | 1.28% | 0.81% | 0.79% | 0.72% | |||||||||||||||
2.66% | 2.56% | 2.33% | 2.48% | 7.73% | 2.22% | |||||||||||||||
1.87% | 0.72% | 1.77% | 2.27% | 7.54% | 2.10% | |||||||||||||||
45% | 132% | 151% | 31% | 98% | 26% |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect impact of a sales charge. Total investment return during all of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect. |
23
Financial highlights
Delaware International Bond Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months | 7/28/112 | |||||||||
Ended | Year Ended | to | ||||||||
4/30/131 | 10/31/12 | 10/31/11 | ||||||||
(Unaudited) | ||||||||||
Net asset value, beginning of period | $9.380 | $11.690 | $12.020 | |||||||
Income (loss) from investment operations: | ||||||||||
Net investment income (loss)3 | 0.087 | 0.170 | (0.025 | ) | ||||||
Net realized and unrealized gain (loss) | (0.223 | ) | 0.184 | (0.218 | ) | |||||
Total from investment operations | (0.136 | ) | 0.354 | (0.243 | ) | |||||
Less dividends and distributions from: | ||||||||||
Net investment income | (0.114 | ) | (2.664 | ) | (0.087 | ) | ||||
Total dividends and distributions | (0.114 | ) | (2.664 | ) | (0.087 | ) | ||||
Net asset value, end of period | $9.130 | $9.380 | $11.690 | |||||||
Total return4 | (1.44% | ) | 4.40% | (2.03% | ) | |||||
Ratios and supplemental data: | ||||||||||
Net assets, end of period (000 omitted) | $1,033 | $1,272 | $166 | |||||||
Ratio of expenses to average net assets | 1.85% | 1.82% | 1.85% | |||||||
Ratio of expenses to average net assets | ||||||||||
prior to fees waived | 2.59% | 3.61% | 3.84% | |||||||
Ratio of net investment income (loss) to average | ||||||||||
net assets | 1.91% | 1.84% | (0.81% | ) | ||||||
Ratio of net investment income (loss) to average | ||||||||||
net assets prior to fees waived | 1.17% | 0.05% | (2.80% | ) | ||||||
Portfolio turnover | 45% | 132% | 151% | 5 |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 Portfolio Turnover is representative of the Fund for the period Nov. 1, 2010 through Oct. 31, 2011. |
See accompanying notes, which are an integral part of the financial statements.
24
Delaware International Bond Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months | 7/28/112 | |||||||||
Ended | Year Ended | to | ||||||||
4/30/131 | 10/31/12 | 10/31/11 | ||||||||
(Unaudited) | ||||||||||
Net asset value, beginning of period | $9.390 | $11.690 | $12.020 | |||||||
Income (loss) from investment operations: | ||||||||||
Net investment income (loss)3 | 0.109 | 0.210 | (0.013 | ) | ||||||
Net realized and unrealized gain (loss) | (0.233 | ) | 0.198 | (0.215 | ) | |||||
Total from investment operations | (0.124 | ) | 0.408 | (0.228 | ) | |||||
Less dividends and distributions from: | ||||||||||
Net investment income | (0.136 | ) | (2.708 | ) | (0.102 | ) | ||||
Total dividends and distributions | (0.136 | ) | (2.708 | ) | (0.102 | ) | ||||
Net asset value, end of period | $9.130 | $9.390 | $11.690 | |||||||
Total return4 | (1.31% | ) | 5.00% | (1.91% | ) | |||||
Ratios and supplemental data: | ||||||||||
Net assets, end of period (000 omitted) | $102 | $26 | $— | |||||||
Ratio of expenses to average net assets | 1.35% | 1.35% | 1.35% | |||||||
Ratio of expenses to average net assets | ||||||||||
prior to fees waived | 2.19% | 3.24% | 3.44% | |||||||
Ratio of net investment income (loss) to average | ||||||||||
net assets | 2.41% | 2.31% | (0.31% | ) | ||||||
Ratio of net investment income (loss) to average | ||||||||||
net assets prior to fees waived | 1.57% | 0.42% | (2.40% | ) | ||||||
Portfolio turnover | 45% | 132% | 151% | 5 |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflect waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
5 Portfolio Turnover is representative of the Fund for the period Nov. 1, 2010 through Oct. 31, 2011. |
See accompanying notes, which are an integral part of the financial statements.
25
Financial highlights
Delaware International Bond Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months | 7/28/111 | |||||||||
Ended | Year Ended | to | ||||||||
4/30/131 | 10/31/12 | 10/31/11 | ||||||||
(Unaudited) | ||||||||||
Net asset value, beginning of period | $9.390 | $11.690 | $12.020 | |||||||
Income (loss) from investment operations: | ||||||||||
Net investment income3 | 0.133 | 0.259 | 0.006 | |||||||
Net realized and unrealized gain (loss) | (0.224 | ) | 0.191 | (0.218 | ) | |||||
Total from investment operations | (0.091 | ) | 0.450 | (0.212 | ) | |||||
Less dividends and distributions from: | ||||||||||
Net investment income | (0.159 | ) | (2.750 | ) | (0.118 | ) | ||||
Total dividends and distributions | (0.159 | ) | (2.750 | ) | (0.118 | ) | ||||
Net asset value, end of period | $9.140 | $9.390 | $11.690 | |||||||
Total return4 | (1.07% | ) | 5.46% | (1.77% | ) | |||||
Ratios and supplemental data: | ||||||||||
Net assets, end of period (000 omitted) | $134 | $157 | $16 | |||||||
Ratio of expenses to average net assets | 0.85% | 0.85% | 0.85% | |||||||
Ratio of expenses to average net assets | ||||||||||
prior to fees waived | 1.59% | 2.64% | 2.84% | |||||||
Ratio of net investment income to average | ||||||||||
net assets | 2.91% | 2.81% | 0.19% | |||||||
Ratio of net investment income (loss) to average | ||||||||||
net assets prior to fees waived | 2.17% | 1.02% | (1.80% | ) | ||||||
Portfolio turnover | 45% | 132% | 151% | 5 |
1 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflect a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 Portfolio Turnover is representative of the Fund for the period Nov. 1, 2010 through Oct. 31, 2011. |
See accompanying notes, which are an integral part of the financial statements.
26
Notes to financial statements | ||
Delaware International Bond Fund | April 30, 2013 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as Delaware statutory trust and offers four series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities Fund, Delaware International Bond Fund and Delaware U.S. Growth Fund. These financial statements and the related notes pertain to Delaware International Bond Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of 4.50%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. The investment objective of the Fund is to seek total return.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. Debt securities and credit default swap (CDS) contracts are valued based upon valuation provided by an independent pricing service or broker/counterparty and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Swaps prices are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Foreign currency exchange contracts and forward foreign cross currency exchange contracts are valued at the mean between the bid and ask prices, which approximates fair value. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Futures contracts are valued at the daily quoted settlement prices. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices, which approximates fair value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its
27
Notes to financial statements
Delaware International Bond Fund
1. Significant Accounting Policies (continued)
securities, generally as of 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal & Foreign Income Taxes — No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2009–Oct. 31, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
Class Accounting — Investment income, common expenses and realized and unrealized gains (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on April 30, 2013.
Foreign Currency Transactions — Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Fund’s prospectus. The value of all assets and liabilities denominated in foreign currencies is translated daily into U.S. dollars at the exchange rate of such currencies against the U.S. dollar. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund generally bifurcates that portion of realized gains and losses on investments in debt securities which is due to changes in foreign exchange rates from that which is due to changes in market prices of debt securities. That portion of gains (losses) is included in the statement of operations under the caption net realized gain (loss) on foreign currencies. The Fund reports
28
certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Interest income is recorded on the accrual basis. Discounts and premiums on debt securities are amortized to interest income over the lives of the respective securities using the effective interest method. Withholding taxes and reclaims on foreign interest have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares and pays distributions from net investment income monthly and net realized gain on investments, if any, annually and may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended April 30, 2013.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which are used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2013, the Fund earned $5 under the agreement.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.65% on the first $500 million of average daily net assets of the Fund, 0.60% on the next $500 million, 0.55% on the next $1.5 billion, and 0.50% on average daily net assets in excess of $2.5 billion.
29
Notes to financial statements
Delaware International Bond Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
DMC has contractually agreed to waive all or a portion, of its management fee and/or pay/reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 fees, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively nonroutine expenses)) do not exceed 0.85% of average daily net assets of the Fund through February 28, 2014. This expense waiver and reimbursement may only be terminated by agreement of the Fund’s Board and DMC, and apply only to expenses paid directly by the Fund.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments Family of Funds on a relative net asset value basis. For the six months ended April 30, 2013, the Fund was charged $ 384 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee of 0.30% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class C shares and 0.60% of the average daily net assets of the Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to limit the Class A and Class R shares’ 12b-1 fees through Feb. 28, 2014 to no more than 0.25% and 0.50% of their respective average daily net assets. This waiver and reimbursement may only be terminated by agreement of the Fund’s Board and DMC.
At April 30, 2013, the Fund had receivables due from or liabilities payable to affiliates as follows:
Receivable from DMC under expense limitation agreement | $ | 313 | |
Dividend disbursing, transfer agent and fund accounting | |||
oversight fees and other expenses payable to DSC | (400 | ) | |
Distribution fees payable to DDLP | (4,337 | ) | |
Other expenses payable to DMC and affiliates* | (338 | ) |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Expenses include items such as printing of shareholder reports, legal and tax services, registration fees and trustees’ fees.
30
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, 2013, the Fund was charged $256 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2013, DDLP earned $1,044 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2013, DDLP received gross CDSC commissions of $1,801 on redemptions of the Fund’s Class C shares 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, 2013, the Fund made purchases of $9,690,861 and sales of $ 6,222,574 of investment securities other than U.S. government securities and short-term investments. For the six months ended April 30, 2013, the Fund made purchases of $ 378,642 and sales of $ 231,567 of long-term U.S. government securities.
At April 30, 2013, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2013, the cost of investments was $17,108,581. At April 30, 2013, net unrealized appreciation was $626,285, of which $714,741 related to unrealized appreciation and $88,456 related to unrealized depreciation.
U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or
31
Notes to financial statements
Delaware International Bond Fund
3. Investments (continued)
liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three level hierarchy of inputs is summarized below.
Level 1 – | inputs are quoted prices in active markets for identical investments (e.g., equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) |
Level 2 – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
Level 3 – | inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of April 30, 2013:
Level 1 | Level 2 | Total | ||||||
Commercial Mortgage-Backed Security | $ | — | $ | 10,568 | $ | 10,568 | ||
Corporate Bonds | — | 9,889,839 | 9,889,839 | |||||
Foreign Debt | — | 7,228,311 | 7,228,311 | |||||
Short-Term Investments | — | 427,438 | 427,438 | |||||
U.S. Treasury Obligations | — | 178,710 | 178,710 | |||||
Total | $ | — | $ | 17,734,866 | $ | 17,734,866 | ||
Foreign Currency Exchange Contracts | $ | — | $ | 76,782 | $ | 76,782 | ||
Futures Contract | $ | 9,008 | $ | — | $ | 9,008 |
32
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
During the six months ended April 30, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
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. GAAP. 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, 2013 and the year ended Oct. 31, 2012 was as follows:
Six Months | Year | ||||||
Ended | Ended | ||||||
4/30/13* | 10/31/12 | ||||||
Ordinary income | $ | 256,253 | $ | 2,593,450 | |||
Return of capital | — | 27,056 | |||||
Total | $ | 256,253 | $ | 2,620,506 |
*Tax information for the six months ended April 30, 2013 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, 2013, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 17,857,318 | |
Realized gains 11/1/12 – 4/30/13 | 79,304 | ||
Capital loss carryforwards as of 10/31/12 | (199,397 | ) | |
Other temporary differences | (52,236 | ) | |
Unrealized appreciation | 712,075 | ||
Net assets | $ | 18,397,064 |
33
Notes to financial statements
Delaware International Bond Fund
5. Components of Net Assets on a Tax Basis (continued)
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 of foreign currency exchange contracts, tax deferral of losses on straddles, tax treatment of market discount and premium on debt instruments.
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 gain (loss) on foreign currency transactions, dividends and distributions, market discount and premium on certain debt instruments, and net operating losses. Results of operations and net assets were not affected by these reclassifications. For the six months ended April 30, 2013, the Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Distributions in excess of net investment income | $ | 49,638 | |
Accumulated net realized gain (loss) | 586,948 | ||
Paid-in capital | (636,586 | ) |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at Oct. 31, 2012 will expire as follows: $154,783 expires in 2014, $21,289 expires in 2016 and $23,325 expires in 2017.
On Dec. 22, 2010, the Regulated Investment Company Modernization Act of 2010 (Act) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes were generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
For the six months ended April 30, 2013, the Fund had capital gains of $79,304, which may reduce the capital loss carryforwards.
34
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | ||||||
Ended | Ended | ||||||
4/30/13 | 10/31/12 | ||||||
Shares Sold: | |||||||
Class A | 512,778 | 286,660 | |||||
Class C | 5,997 | 118,699 | |||||
Class R | 8,561 | 2,700 | |||||
Institutional Class | 7,652 | 15,286 | |||||
Shares issued upon reinvestment of dividends and distributions: | |||||||
Class A | 25,592 | 285,008 | |||||
Class C | 1,419 | 4,937 | |||||
Class R | 118 | 44 | |||||
Institutional Class | 200 | 531 | |||||
562,317 | 713,865 | ||||||
Shares redeemed: | |||||||
Class A | (61,741 | ) | (57,366 | ) | |||
Class C | (29,770 | ) | (2,275 | ) | |||
Class R | (221 | ) | — | ||||
Institutional Class | (9,937 | ) | (428 | ) | |||
(101,669 | ) | (60,069 | ) | ||||
Net increase | 460,648 | 653,796 |
7. Fund Reorganization
Following the close of business on July 28, 2011, pursuant to a Plan of Reorganization (Reorganization), the Fund received all of the assets and liabilities of The International Fixed Income Portfolio, a series of the Delaware Pooled® Trust (Portfolio). The shareholders of the Portfolio received Class A shares of the Fund with an aggregate net asset value equal to the aggregate net asset value of their shares in the Portfolio immediately prior to the Reorganization, shown as in the following table:
Shares Prior to | Shares After | |||||||||
Reorganization | Reorganization | Value | ||||||||
Class A | — | 866,702 | $ | 10,430,781 | ||||||
Institutional Class | 866,702 | — | 10,430,781 |
35
Notes to financial statements
Delaware International Bond Fund
7. Fund Reorganization (continued)
The Reorganization was treated as a tax-free reorganization for federal income purposes and, accordingly, the basis of the assets of the Fund reflected the historical basis of the assets of the Portfolio as of the date of the Reorganization. For financial reporting purposes, the Portfolio’s operating history prior to the Reorganization is reflected in the Fund’s financial statements and financial highlights. The net assets, net unrealized appreciation and accumulated net realized gain of the Portfolio as of the close of business on July 28, 2011, were as follows:
Net assets | $ | 10,480,781 |
Accumulated net realized gain | 1,890,587 | |
Net unrealized appreciation | 942,547 |
8. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $125,000,000 revolving line of credit to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement expired on Nov. 13, 2012.
On Nov. 13, 2012, the Fund, along with the other Participants, entered into an amendment to the agreement for a $125,000,000 revolving line of credit. The agreement is to be used as described above and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of April 30, 2013 or at any time during the period then ended.
9. Derivatives
U.S. GAAP requires disclosures that enable investors to understand: 1) how and why an entity uses derivatives; 2) how they are accounted for; and 3) how they affect an entity’s results of operations and financial position.
Foreign Currency Exchange Contracts — The Fund enters into foreign currency exchange contracts and forward foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
36
The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts and foreign cross currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty. The Fund received $10,000 in securities collateral for foreign currency exchange contracts.
Futures Contracts — A futures contract is an agreement in which the writer (or seller) of the contract agrees to deliver to the buyer an amount of cash or securities equal to a specific dollar amount times the difference between the value of a specific security or index at the close of the last trading day of the contract and the price at which the agreement is made. The Fund may use futures in the normal course of pursuing its investment objective. The Fund may invest in futures contracts to hedge its existing portfolio securities against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a futures contract, the Fund deposits cash or pledges U.S. government securities to a broker, equal to the minimum “initial margin” requirements of the exchange on which the contract is traded. Subsequent payments are received from the broker or paid to the broker each day, based on the daily fluctuation in the market value of the contract. These receipts or payments are known as “variation margin” and are recorded daily by the Fund as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Risks of entering into futures contracts include potential imperfect correlation between the futures contracts and the underlying securities and the possibility of an illiquid secondary market for these instruments. When investing in futures, there is reduced counterparty credit risk to the Fund because futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees against default. The Fund posted $11,450 as cash collateral for futures contracts.
Options Contracts — During the six months ended April 30, 2013, the Fund entered into options contracts in the normal course of pursuing its investment objective. The Fund may buy or write options contracts for any number of reasons, including without limitation: to manage the Fund’s exposure to changes in securities prices and foreign currencies; as an efficient means of adjusting the Fund’s overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, futures, swaps “swaptions”, financial indices, and foreign currencies. When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of
37
Notes to financial statements
Delaware International Bond Fund
9. Derivatives (continued)
the options purchased. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty risk because the counterparty is only obligated to pay premiums and does not bear the market risk of an unfavorable market change. No options contracts were outstanding at April 30, 2013.
Swap Contracts — The Fund enters into CDS contracts in the normal course of pursuing its investment objective. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets. The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty combined with any credit enhancements, is rated at least BBB- by Standard & Poor’s (S&P) or Baa3 by Moody’s or is determined to be of equivalent quality by the manager.
Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the Fund in connection with an unwinding or assignment of a CDS contract. Upon the occurrence of a credit event, the seller of protection would pay the par (or other agreed-upon) value of the reference security (or basket of securities) to the counterparty. Credit events generally include, among others, bankruptcy, failure to pay, and obligation default.
During the six months ended April 30, 2013, the Fund entered into CDS contracts as a purchaser of protection. Periodic payments on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment, such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement.
38
CDS contracts may involve greater risks than if the Fund had invested in the reference obligation directly. CDS contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Fund’s maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
Swaps Generally. The value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the agreement. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts. No swap contracts were outstanding at April 30, 2013.
Fair values of derivative instruments as of April 30, 2013 were as follows:
Asset Derivatives | Liability Derivatives | ||||||||||
Statement of | Statement of | ||||||||||
Net Assets Location | Fair Value | Net Assets Location | Fair Value | ||||||||
Forward currency exchange contracts (Foreign currency | |||||||||||
exchange contracts) | Receivables and other assets net of liabilities | $ | 91,345 | Receivables and other assets net of liabilities | $ | (14,563 | ) | ||||
Interest rate contracts | |||||||||||
(Futures contracts) | Receivables and other assets net of liabilities | 9,008 | Receivables and other assets net of liabilities | — | |||||||
Total | $ | 100,353 | $ | (14,563 | ) |
39
Notes to financial statements
Delaware International Bond Fund
9. Derivatives (continued)
The effect of derivative instruments on the statement of operations for the six months ended April 30, 2013 was as follows:
Change in | ||||||||||||||
Unrealized | ||||||||||||||
Realized Gain | Appreciation | |||||||||||||
(Loss) on | (Depreciation) | |||||||||||||
Derivatives | on Derivatives | |||||||||||||
Location of Gain (Loss) on | Recognized in | Recognized in | ||||||||||||
Derivatives Recognized in Income | Income | Income | ||||||||||||
Forward currency exchange contracts (Foreign currency | ||||||||||||||
exchange contracts) | Net realized loss on foreign currency exchange contracts and net change in unrealized appreciation (depreciation) of foreign currency exchange contracts | $ | (661,195 | ) | $ | 74,657 | ||||||||
Interest rate contracts | ||||||||||||||
(Futures contracts) | Net realized loss on futures contracts and net change in unrealized appreciation (depreciation) of futures contracts | (70,355 | ) | 9,008 | ||||||||||
Credit contracts | ||||||||||||||
(Swap contracts) | Net realized loss on swap contracts and net change in unrealized appreciation (depreciation) of swap contracts | (11,563 | ) | — | ||||||||||
Total | $ | (743,113 | ) | $ | 83,665 |
40
Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended April 30, 2013.
Long | Short | ||||
Derivative | Derivative | ||||
Volume | Volume | ||||
Forward foreign currency contracts (average cost) | USD | 8,205,133 | USD | 1,594,351 | |
Futures contracts (average notional value) | 392,316 | 476,142 | |||
Options contracts (average notional value) | 1 | — | |||
Swap contracts (average notional value)* | EUR | 8,049 | — | ||
USD | 24,390 | — |
*Long represents buying protection and short represents selling protection.
10. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. 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
41
Notes to financial statements
Delaware International Bond Fund
10. Securities Lending (continued)
investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. During the six months ended April 30, 2013, the Fund had no securities out on loan.
11. Credit and Market Risk
Some countries in which the Fund may invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is deterioration in a country’s balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller, less liquid, and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.
The Fund invests in high yield fixed income securities, which are securities rated lower than BBB- by S&P and Baa3 by Moody’s Investors Service, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment-grade securities.
42
The Fund invests in certain obligations held by the Fund that may have liquidity protection to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies or letter of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of April 30, 2013, no securities have been determined to be illiquid under the Fund’s Liquidity Procedures. Rule 144A securities have been identified on the statement of net assets.
13. 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.
14. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to April 30, 2013 that would require recognition or disclosure in the Fund’s financial statements.
43
About the organization
Board of trustees | |||
Patrick P. Coyne Chairman, President, and Chief Executive Officer Delaware Investments® Family of Funds Philadelphia, PA Thomas L. Bennett | Joseph W. Chow Former Executive Vice President State Street Corporation Brookline, MA John A. Fry President Drexel University Philadelphia, PA Anthony D. Knerr Founder and Managing Director Anthony Knerr & Associates New York, NY | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor Senior Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens | David P. O’Connor Executive Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | Richard Salus Senior Vice President and Chief Financial Officer Delaware Investments Family of Funds Philadelphia, PA |
This semiannual report is for the information of Delaware International Bond Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawareinvestments.com. | |||
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Fund’s Schedule of Investments are available without charge on the Fund’s website at delawareinvestments.com. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund’s website at delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
44
Semiannual report Delaware Global Real Estate Opportunities Fund April 30, 2013 Alternative / specialty mutual fund |
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing. |
You can obtain shareholder reports and prospectuses online instead of in the mail. Visit delawareinvestments.com/edelivery. |
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Global Real Estate Opportunities Fund at delawareinvestments.com.
- 24-hour access to your account information
- Obtain share prices
- Check your account balance and recent transactions
- Request statements or literature
- Make purchases and redemptions
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
Investments in Delaware Global Real Estate Opportunities Fund are not and will not be deposits with or liabilities of Macquarie Bank Limited ABN 46 008 583 542 and its holding companies, including their subsidiaries or related companies (Macquarie Group), and are subject to investment risk, including possible delays in repayment and loss of income and capital invested. No Macquarie Group company guarantees or will guarantee the performance of the Fund, the repayment of capital from the Fund, or any particular rate of return.
Table of contents | |
Disclosure of Fund expenses | 1 |
Security type/country and sector allocations | 3 |
Statement of net assets | 5 |
Statement of operations | 12 |
Statements of changes in net assets | 14 |
Financial highlights | 16 |
Notes to financial statements | 22 |
About the organization | 37 |
Unless otherwise noted, views expressed herein are current as of April 30, 2013, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Disclosure of Fund expenses
For the six-month period from November 1, 2012 to April 30, 2013 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2012 to April 30, 2013.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
Delaware Global Real Estate Opportunities Fund
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | |||||||||||||||
Account Value | Account Value | Annualized | Paid During Period | ||||||||||||||
11/1/12 | 4/30/13 | Expense Ratio | 11/1/12 to 4/30/13* | ||||||||||||||
Actual Fund return† | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,199.30 | 1.40% | $ | 7.63 | ||||||||||
Class C | 1,000.00 | 1,194.90 | 2.15% | 11.70 | |||||||||||||
Class R | 1,000.00 | 1,198.10 | 1.65% | 8.99 | |||||||||||||
Institutional Class | 1,000.00 | 1,202.80 | 1.15% | 6.28 | |||||||||||||
Hypothetical 5% return (5% return before expenses) | |||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,017.85 | 1.40% | $ | 7.00 | ||||||||||
Class C | 1,000.00 | 1,014.13 | 2.15% | 10.74 | |||||||||||||
Class R | 1,000.00 | 1,016.61 | 1.65% | 8.25 | |||||||||||||
Institutional Class | 1,000.00 | 1,019.09 | 1.15% | 5.76 |
*“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).
†Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns.
2
Security type/country and sector allocations | |
Delaware Global Real Estate Opportunities Fund | As of April 30, 2013 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one Fund being different than another Fund’s sector designations.
Security type/country | Percentage of net assets | |
Common Stock | 100.41 | % |
Australia | 10.89 | % |
Belgium | 0.56 | % |
Canada | 2.45 | % |
China/Hong Kong | 10.18 | % |
France | 2.11 | % |
Germany | 1.08 | % |
Japan | 10.19 | % |
Mexico | 2.14 | % |
Singapore | 3.35 | % |
Sweden | 1.01 | % |
United Kingdom | 5.77 | % |
United States | 50.68 | % |
Short-Term Investments | 0.27 | % |
Securities Lending Collateral | 1.34 | % |
Total Value of Securities | 102.02 | % |
Obligation to Return Securities Lending Collateral | (1.77 | %) |
Other Liabilities Net of Receivables and Other Assets | (0.25 | %) |
Total Net Assets | 100.00 | % |
3
Security type/country and sector allocations
Common stock by sector | Percentage of net assets | |
Diversified REITs | 15.54 | % |
Healthcare REITs | 5.15 | % |
Hotel REITs | 4.84 | % |
Industrial REITs | 5.45 | % |
Mall REITs | 9.73 | % |
Manufactured Housing REIT | 0.85 | % |
Multifamily REITs | 9.25 | % |
Office REITs | 14.92 | % |
Office/Industrial REITs | 4.20 | % |
Real Estate Management Services | 1.63 | % |
Real Estate Operating Companies/Developer | 11.18 | % |
Retail REITs | 8.78 | % |
Self-Storage REIT | 1.91 | % |
Shopping Center REITs | 2.95 | % |
Single Tenant REIT | 0.80 | % |
Specialty REITs | 3.23 | % |
Total | 100.41 | % |
4
Statement of net assets | |
Delaware Global Real Estate Opportunities Fund | April 30, 2013 (Unaudited) |
Number of shares | Value (U.S. $) | |||||
ΔCommon Stock – 100.41% | ||||||
Australia – 10.89% | ||||||
Dexus Property Group | 702,910 | $ | 841,656 | |||
Federation Centres | 174,114 | 469,310 | ||||
Goodman Group | 217,402 | 1,174,234 | ||||
@=† | GPT Group-In Specie | 1,377,200 | 0 | |||
Investa Office Fund | 158,674 | 539,551 | ||||
Mirvac Group | 541,361 | 993,375 | ||||
Westfield Group | 209,429 | 2,529,391 | ||||
Westfield Retail Trust | 208,043 | 711,738 | ||||
7,259,255 | ||||||
Belgium – 0.56% | ||||||
* | Cofinimmo | 3,109 | 374,433 | |||
374,433 | ||||||
Canada – 2.45% | ||||||
Boardwalk Real Estate Investment Trust | 12,850 | 840,170 | ||||
Canadian Real Estate Investment Trust | 16,706 | 790,486 | ||||
1,630,656 | ||||||
China/Hong Kong – 10.18% | ||||||
China Overseas Land & Investment | 116,000 | 354,272 | ||||
Hongkong Land Holdings | 157,000 | 1,139,820 | ||||
Hysan Development | 197,149 | 976,834 | ||||
Link REIT | 260,000 | 1,472,523 | ||||
* | Sun Hung Kai Properties | 165,053 | 2,386,416 | |||
Wharf Holdings | 51,685 | 461,226 | ||||
6,791,091 | ||||||
France – 2.11% | ||||||
Klepierre | 22,350 | 947,769 | ||||
Unibail-Rodamco | 1,761 | 460,351 | ||||
1,408,120 | ||||||
Germany – 1.08% | ||||||
Alstria Office REIT | 59,335 | 718,899 | ||||
718,899 | ||||||
Japan – 10.19% | ||||||
† | GLP J-REIT | 637 | 656,048 | |||
Japan Real Estate Investment | 49 | 656,450 | ||||
Kenedix Realty Investment | 99 | 464,610 |
5
Statement of net assets
Delaware Global Real Estate Opportunities Fund
Number of shares | Value (U.S. $) | |||||
ΔCommon Stock (continued) | ||||||
Japan (continued) | ||||||
Mitsubishi Estate | 83,642 | $ | 2,715,565 | |||
Mitsui Fudosan | 50,446 | 1,712,840 | ||||
Nippon Building Fund | 41 | 589,650 | ||||
6,795,163 | ||||||
Mexico – 2.14% | ||||||
Concentradora Fibra Hotelera Mexicana | 386,665 | 788,112 | ||||
Fibra Uno Administracion | 167,190 | 642,440 | ||||
1,430,552 | ||||||
Singapore – 3.35% | ||||||
* | CapitaCommerical Trust | 150,245 | 208,597 | |||
Global Logistic Properties | 230,000 | 515,406 | ||||
Keppel Land | 87,000 | 286,786 | ||||
Mapletree Logistics Trust | 531,094 | 564,879 | ||||
Suntec REIT | 416,000 | 656,940 | ||||
2,232,608 | ||||||
Sweden – 1.01% | ||||||
Hufvudstaden Class A | 51,495 | 673,096 | ||||
673,096 | ||||||
United Kingdom – 5.77% | ||||||
British Land | 121,561 | 1,122,611 | ||||
Derwent London | 37,573 | 1,347,668 | ||||
Great Portland Estates | 77,458 | 640,120 | ||||
Shaftesbury | 77,831 | 734,484 | ||||
3,844,883 | ||||||
United States – 50.68% | ||||||
† | Altisource Residential | 57,100 | 1,084,900 | |||
American Tower | 11,696 | 982,347 | ||||
Apartment Investment & Management | 29,646 | 922,287 | ||||
AvalonBay Communities | 5,990 | 796,910 | ||||
Boston Properties | 12,595 | 1,378,271 | ||||
BRE Properties | 9,895 | 499,500 | ||||
Camden Property Trust | 14,642 | 1,059,202 | ||||
CBL & Associates Properties | 26,032 | 628,412 | ||||
Colonial Properties Trust | 22,734 | 527,656 | ||||
Corporate Office Properties Trust | 23,804 | 690,078 | ||||
DCT Industrial Trust | 48,195 | 377,367 |
6
Number of shares | Value (U.S. $) | |||||
ΔCommon Stock (continued) | ||||||
United States (continued) | ||||||
* | DuPont Fabros Technology | 11,860 | $ | 298,160 | ||
Equity Lifestyle Properties | 6,986 | 567,613 | ||||
Equity Residential | 26,150 | 1,518,269 | ||||
First Industrial Realty Trust | 39,642 | 711,177 | ||||
First Potomac Realty Trust | 15,347 | 245,552 | ||||
General Growth Properties | 56,199 | 1,276,841 | ||||
HCP | 19,418 | 1,034,979 | ||||
Healthcare Realty Trust | 23,654 | 710,093 | ||||
Healthcare Trust of America Class A | 30,216 | 377,096 | ||||
Host Hotels & Resorts | 48,543 | 886,881 | ||||
Kilroy Realty | 5,534 | 313,169 | ||||
Kimco Realty | 32,984 | 784,360 | ||||
Kite Realty Group Trust | 20,904 | 137,966 | ||||
Lexington Realty Trust | 41,801 | 535,471 | ||||
Liberty Property Trust | 16,472 | 708,131 | ||||
Macerich | 6,020 | 421,701 | ||||
* | National Retail Properties | 13,509 | 536,037 | |||
ProLogis | 26,864 | 1,126,945 | ||||
Public Storage | 7,726 | 1,274,790 | ||||
Ramco-Gershenson Properties Trust | 32,362 | 565,364 | ||||
RLJ Lodging Trust | 8,960 | 206,438 | ||||
Simon Property Group | 23,349 | 4,157,756 | ||||
SL Green Realty | 11,192 | 1,015,114 | ||||
† | Strategic Hotel & Resorts | 66,838 | 539,383 | |||
Summit Hotel Properties | 45,723 | 456,773 | ||||
† | Sunstone Hotel Investors | 28,239 | 350,446 | |||
Tanger Factory Outlet Centers | 12,914 | 479,368 | ||||
Ventas | 16,508 | 1,314,532 | ||||
Vornado Realty Trust | 21,628 | 1,893,748 | ||||
Washington REIT | 13,953 | 398,498 | ||||
33,789,581 | ||||||
Total Common Stock (cost $56,920,960) | 66,948,337 |
7
Statement of net assets
Delaware Global Real Estate Opportunities Fund
Principal amount | ||||||||
(U.S. $) | Value (U.S. $) | |||||||
Short-Term Investments – 0.27% | ||||||||
≠Discount Note – 0.04% | ||||||||
Federal Home Loan Bank 0.085% 5/24/13 | $ | 27,432 | $ | 27,432 | ||||
27,432 | ||||||||
U.S. Treasury Obligation – 0.23% | ||||||||
U.S. Treasury Bill 0.065% 5/9/13 | 149,758 | 149,757 | ||||||
149,757 | ||||||||
Total Short-Term Investments (cost $177,186) | 177,189 | |||||||
Total Value of Securities Before Securities | ||||||||
Lending Collateral – 100.68% (cost $57,098,146) | 67,125,526 |
Number of shares | |||||||||
**Securities Lending Collateral – 1.34% | |||||||||
Investment Companies | |||||||||
Delaware Investments Collateral Fund No.1 | 892,529 | 892,529 | |||||||
@†Mellon GSL Reinvestment Trust II | 284,009 | 0 | |||||||
Total Securities Lending Collateral | |||||||||
(cost $1,176,538) | 892,529 | ||||||||
©Total Value of Securities – 102.02% | |||||||||
(cost $58,274,684) | 68,018,055 | ||||||||
**Obligation to Return Securities | |||||||||
Lending Collateral – (1.77%) | (1,176,538 | ) | |||||||
«Other Liabilities Net of Receivables and | |||||||||
Other Assets – (0.25%) | (168,249 | ) | |||||||
Net Assets Applicable to 9,419,959 Shares | |||||||||
Outstanding – 100.00% | $ | 66,673,268 | |||||||
Net Asset Value – Delaware Global Real Estate Opportunities Fund | |||||||||
Class A ($2,510,204 / 354,460 Shares) | $7.08 | ||||||||
Net Asset Value – Delaware Global Real Estate Opportunities Fund | |||||||||
Class C ($151,924 / 21,486 Shares) | $7.07 | ||||||||
Net Asset Value – Delaware Global Real Estate Opportunities Fund | |||||||||
Class R ($7,909 / 1,118 Shares) | $7.07 | ||||||||
Net Asset Value – Delaware Global Real Estate Opportunities Fund | |||||||||
Institutional Class ($64,003,231 / 9,042,895 Shares) | $7.08 |
8
Components of Net Assets at April 30, 2013: | ||||
Shares of beneficial interest | ||||
(unlimited authorization – no par) | $ | 156,537,932 | ||
Distributions in excess of net investment income | (698,422 | ) | ||
Accumulated net realized loss on investments | (98,908,286 | ) | ||
Net unrealized appreciation of investments and derivatives | 9,742,044 | |||
Total net assets | $ | 66,673,268 |
Δ | Securities have been classified by country of origin. Classification by type of business has been presented on page 4 in “Security type/country and sector allocations.” |
@ | Illiquid security. At April 30, 2013, the aggregate value of illiquid securities was $0, which represented 0.00% of the Fund’s net assets. See Note 12 in “Notes to financial statements.” |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At April 30, 2013, the aggregate value of fair valued securities was $0, which represented 0.00% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
† | Non income producing security. |
* | Fully or partially on loan. |
≠ | The rate shown is the effective yield at the time of purchase. |
** | See Note 11 in “Notes to financial statements” for additional information on securities lending collateral. |
© | Includes $1,140,573 of securities loaned. |
« | Includes foreign currency valued at $8,745 with a cost of $8,711. |
Net Asset Value and Offering Price Per Share – | |||
Delaware Global Real Estate Opportunities Fund | |||
Net asset value Class A (A) | $ | 7.08 | |
Sales charge (5.75% of offering price) (B) | 0.43 | ||
Offering price | $ | 7.51 |
(A) | Net asset value per share, as illustrated, is the amount that would be paid upon redemption or repurchase of shares. |
(B) | See the current prospectus for purchases of $50,000 or more. |
9
Statement of net assets
Delaware Global Real Estate Opportunities Fund
The following foreign currency exchange contract was outstanding at April 30, 2013:1 |
Foreign Currency Exchange Contract
Unrealized | ||||||||||||||
Contract to | Appreciation | |||||||||||||
Counterparty | Receive (Deliver) | In Exchange For | Settlement Date | (Depreciation) | ||||||||||
MNB | JPY | (12,747,240 | ) | USD 129,047 | 5/2/13 | $ | (1,716 | ) |
The use of foreign currency exchange contracts involves elements of market risk and risks in excess of the amounts disclosed in the financial statements. The foreign currency exchange contract presented above represents the Fund’s total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Fund’s net assets.
1See Note 10 in “Notes to financial statements.”
Summary of abbreviations:
JPY — Japanese Yen
MNB — Mellon National Bank
REIT — Real Estate Investment Trust
USD — United States Dollar
See accompanying notes, which are an integral part of the financial statements.
10
Statement of operations | |
Delaware Global Real Estate Opportunities Fund | Six Months Ended April 30, 2013 (Unaudited) |
Investment Income: | |||||||||
Dividends | $ | 1,212,796 | |||||||
Securities lending income | 6,208 | ||||||||
Interest | 391 | ||||||||
Foreign tax withheld | (61,293 | ) | $ | 1,158,102 | |||||
Expenses: | |||||||||
Management fees | 364,155 | ||||||||
Registration fees | 56,476 | ||||||||
Dividend disbursing and transfer agent fees and expenses | 17,644 | ||||||||
Reports and statements to shareholders | 15,100 | ||||||||
Accounting and administration expenses | 14,270 | ||||||||
Custodian fees | 11,067 | ||||||||
Dues and services | 5,455 | ||||||||
Legal fees | 3,991 | ||||||||
Audit and tax | 2,327 | ||||||||
Distribution expenses – Class A | 1,969 | ||||||||
Distribution expenses – Class C | 335 | ||||||||
Distribution expenses – Class R | 21 | ||||||||
Pricing fees | 1,753 | ||||||||
Trustees’ fees | 1,741 | ||||||||
Insurance fees | 652 | ||||||||
Consulting fees | 363 | ||||||||
Trustees’ expenses | 137 | 497,456 | |||||||
Less fees waived | (71,724 | ) | |||||||
Less waived distribution expenses – Class R | (4 | ) | |||||||
Less expense paid indirectly | (3 | ) | |||||||
Total operating expenses | 425,725 | ||||||||
Net Investment Income | 732,377 |
12
Net Realized and Unrealized Gain (Loss): | |||||
Net realized gain (loss) on: | |||||
Investments | $ | 8,295,425 | |||
Foreign currencies | (32,671 | ) | |||
Foreign currency exchange contracts | (45,709 | ) | |||
Net realized gain | 8,217,045 | ||||
Net change in unrealized appreciation (depreciation) of: | |||||
Investments | 4,516,578 | ||||
Foreign currencies | 1,361 | ||||
Foreign currency exchange contracts | (1,716 | ) | |||
Net change in unrealized appreciation (depreciation) | 4,516,223 | ||||
Net Realized and Unrealized Gain | 12,733,268 | ||||
Net Increase in Net Assets Resulting from Operations | $ | 13,465,645 |
See accompanying notes, which are an integral part of the financial statements.
13
Statements of changes in net assets
Delaware Global Real Estate Opportunities Fund
Six Months | Year | |||||||
Ended | Ended | |||||||
4/30/13 | 10/31/12 | |||||||
(Unaudited) | ||||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 732,377 | $ | 941,824 | ||||
Net realized gain | 8,217,045 | 3,935,886 | ||||||
Net change in unrealized appreciation (depreciation) | 4,516,223 | 4,060,411 | ||||||
Net increase in net assets resulting from operations | 13,465,645 | 8,938,121 | ||||||
Dividends and Distributions to shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (33,021 | ) | (306 | ) | ||||
Class C | (678 | ) | — | |||||
Class R | (177 | ) | — | |||||
Institutional Class | (2,133,952 | ) | (2,051,090 | ) | ||||
(2,167,828 | ) | (2,051,396 | ) | |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 1,959,773 | 39,337 | ||||||
Class C | 113,498 | 6 | ||||||
Class R | — | 6 | ||||||
Institutional Class | 2,711,556 | 40,552,760 | ||||||
Net asset value of shares issued upon reinvestment of | ||||||||
dividends and distributions: | ||||||||
Class A | 27,611 | 306 | ||||||
Class C | 678 | — | ||||||
Class R | 176 | — | ||||||
Institutional Class | 1,958,656 | 1,861,763 | ||||||
Net asset from reorganization:* | ||||||||
Class A | — | — | ||||||
Institutional Class | — | — | ||||||
Net assets from merger:** | ||||||||
Class A | — | 243,416 | ||||||
Class C | — | 25,156 | ||||||
Class R | — | 7,010 | ||||||
Institutional Class | — | 1,170,087 | ||||||
6,771,948 | 43,899,847 |
14
Six Months | Year | ||||||
Ended | Ended | ||||||
4/30/13 | 10/31/12 | ||||||
(Unaudited) | |||||||
Capital Share Transactions (continued): | |||||||
Cost of shares redeemed: | |||||||
Class A | $ | (86,725 | ) | $ | — | ||
Class C | (2,655 | ) | — | ||||
Class R | — | (528 | ) | ||||
Institutional Class | (28,062,123 | ) | (23,398,216 | ) | |||
(28,151,503 | ) | (23,398,744 | ) | ||||
Increase (decrease) in net assets derived from capital | |||||||
share transactions | (21,379,555 | ) | 20,501,103 | ||||
Net Increase (Decrease) in Net Assets | (10,081,738 | ) | 27,387,828 | ||||
Net Assets: | |||||||
Beginning of period | 76,755,006 | 49,367,178 | |||||
End of period (including distributions in excess of | |||||||
net investment income of $698,422 and | |||||||
$815,409, respectively) | $ | 66,673,268 | $ | 76,755,006 |
* | See Note 7 in “Notes to financial statements.” |
** | See Note 8 in “Notes to financial statements.” |
See accompanying notes, which are an integral part of the financial statements.
15
Financial highlights
Delaware Global Real Estate Opportunities Fund Class A1
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income3 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Total dividends and distributions |
Net asset value, end of period |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
1 The Fund is the successor to The Global Real Estate Securities Portfolio, formerly a series of the Delaware Pooled® Trust, pursuant to the reorganization (Reorganization) of The Global Real Estate Securities Portfolio which occurred after the close of business on Sept. 28, 2012. Prior to the Reorganization, the Fund had no investment operations. The information shown is historical information for The Global Real Estate Securities Portfolio. |
2 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
See accompanying notes, which are an integral part of the financial statements.
16
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/132 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$6.060 | $5.370 | $5.780 | $5.040 | $4.420 | $9.000 | |||||||||||||||
0.056 | 0.103 | 0.148 | 0.129 | 0.129 | 0.137 | |||||||||||||||
1.124 | 0.799 | (0.069 | ) | 0.973 | 0.491 | (4.402 | ) | |||||||||||||
1.180 | 0.902 | 0.079 | 1.102 | 0.620 | (4.265 | ) | ||||||||||||||
(0.160 | ) | (0.212 | ) | (0.489 | ) | (0.362 | ) | — | (0.315 | ) | ||||||||||
(0.160 | ) | (0.212 | ) | (0.489 | ) | (0.362 | ) | — | (0.315 | ) | ||||||||||
$7.080 | $6.060 | $5.370 | $5.780 | $5.040 | $4.420 | |||||||||||||||
19.93% | 17.79% | 1.68% | 23.26% | 14.03% | (48.88% | ) | ||||||||||||||
$2,510 | $297 | $8 | $8 | $6 | $6 | |||||||||||||||
1.40% | 1.38% | 1.39% | 1.50% | 1.32% | 1.34% | |||||||||||||||
1.60% | 1.52% | 1.49% | 1.50% | 1.46% | 1.37% | |||||||||||||||
1.75% | 1.65% | 2.69% | 2.52% | 3.20% | 1.96% | |||||||||||||||
1.55% | 1.51% | 2.59% | 2.52% | 3.06% | 1.92% | |||||||||||||||
56% | 128% | 155% | 185% | 124% | 96% |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
17
Financial highlights
Delaware Global Real Estate Opportunities Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months Ended | 10/1/121 | ||||||
4/30/132 | to | ||||||
(Unaudited) | 10/31/12 | ||||||
Net asset value, beginning of period | $6.060 | $5.960 | |||||
Income (loss) from investment operations: | |||||||
Net investment income (loss)3 | 0.033 | (0.005 | ) | ||||
Net realized and unrealized gain | 1.122 | 0.105 | |||||
Total from investment operations | 1.155 | 0.100 | |||||
Less dividends and distributions from: | |||||||
Net investment income | (0.145 | ) | — | ||||
Total dividends and distributions | (0.145 | ) | — | ||||
Net asset value, end of period | $7.070 | $6.060 | |||||
Total return4 | 19.49% | 1.68% | |||||
Ratios and supplemental data: | |||||||
Net assets, end of period (000 omitted) | $152 | $25 | |||||
Ratio of expenses to average net assets | 2.15% | 2.15% | |||||
Ratio of expenses to average net assets | |||||||
prior to fees waived | 2.35% | 2.52% | |||||
Ratio of net investment income (loss) to average net assets | 1.00% | (0.93% | ) | ||||
Ratio of net investment income (loss) to average net assets | |||||||
prior to fees waived | 0.80% | (1.30% | ) | ||||
Portfolio turnover | 56% | 128% | 5 |
1 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
2 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 Portfolio turnover is representative of the Fund for the entire annual period. |
See accompanying notes, which are an integral part of the financial statements.
18
Delaware Global Real Estate Opportunities Fund R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Six Months Ended | 10/1/121 | |||||||
4/30/132 | to | |||||||
(Unaudited) | 10/31/12 | |||||||
Net asset value, beginning of period | $6.060 | $5.960 | ||||||
Income (loss) from investment operations: | ||||||||
Net investment income (loss)3 | 0.048 | (0.002 | ) | |||||
Net realized and unrealized gain | 1.124 | 0.102 | ||||||
Total from investment operations | 1.172 | 0.100 | ||||||
Less dividends and distributions from: | ||||||||
Net investment income | (0.162 | ) | — | |||||
Total dividends and distributions | (0.162 | ) | — | |||||
Net asset value, end of period | $7.070 | $6.060 | ||||||
Total return4 | 19.81% | 1.68% | ||||||
Ratios and supplemental data: | ||||||||
Net assets, end of period (000 omitted) | $8 | $7 | ||||||
Ratio of expenses to average net assets | 1.65% | 1.65% | ||||||
Ratio of expenses to average net assets | ||||||||
prior to fees waived | 1.95% | 2.12% | ||||||
Ratio of net investment income (loss) to average net assets | 1.50% | (0.43% | ) | |||||
Ratio of net investment income (loss) to average net assets | ||||||||
prior to fees waived | 1.20% | (0.90% | ) | |||||
Portfolio turnover | 56% | 128% | 5 |
1 Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
2 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during all of the periods shown reflects waivers by the manager and distributor. Performance would have been lower had the waivers not been in effect. |
5 Portfolio turnover is representative of the Fund for the entire annual period. |
See accompanying notes, which are an integral part of the financial statements.
19
Financial highlights
Delaware Global Real Estate Opportunities Fund Institutional Class1
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income3 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Total dividends and distributions |
Net asset value, end of period |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets |
Ratio of expenses to average net assets |
prior to fees waived |
Ratio of net investment income to average net assets |
Ratio of net investment income to average net assets |
prior to fees waived |
Portfolio turnover |
1 The Fund is the successor to The Global Real Estate Securities Portfolio, formerly a series of the Delaware Pooled® Trust, pursuant to the reorganization (Reorganization) of The Global Real Estate Securities Portfolio which occurred after the close of business on Sept. 28, 2012. Prior to the Reorganization, the Fund had no investment operations. The information shown is historical information for The Global Real Estate Securities Portfolio. |
2 Ratios have been annualized and total return and portfolio turnover have not been annualized. |
3 The average shares outstanding method has been applied for per share information. |
See accompanying notes, which are an integral part of the financial statements.
20
Six Months Ended | Year Ended | |||||||||||||||||||
4/30/132 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | 10/31/08 | |||||||||||||||
(Unaudited) | ||||||||||||||||||||
$6.060 | $5.390 | $5.790 | $5.050 | $4.430 | $9.020 | |||||||||||||||
0.063 | 0.105 | 0.163 | 0.142 | 0.139 | 0.155 | |||||||||||||||
1.135 | 0.791 | (0.061 | ) | 0.971 | 0.490 | (4.409 | ) | |||||||||||||
1.198 | 0.896 | 0.102 | 1.113 | 0.629 | (4.254 | ) | ||||||||||||||
(0.178 | ) | (0.226 | ) | (0.502 | ) | (0.373 | ) | (0.009 | ) | (0.336 | ) | |||||||||
(0.178 | ) | (0.226 | ) | (0.502 | ) | (0.373 | ) | (0.009 | ) | (0.336 | ) | |||||||||
$7.080 | $6.060 | $5.390 | $5.790 | $5.050 | $4.430 | |||||||||||||||
20.28% | 17.68% | 2.10% | 23.49% | 13.75% | (48.74% | ) | ||||||||||||||
$64,003 | $76,426 | $49,359 | $60,307 | $54,761 | $87,945 | |||||||||||||||
1.15% | 1.13% | 1.14% | 1.25% | 1.07% | 1.09% | |||||||||||||||
1.35% | 1.27% | 1.24% | 1.25% | 1.21% | 1.12% | |||||||||||||||
2.00% | 1.90% | 2.94% | 2.77% | 3.45% | 2.21% | |||||||||||||||
1.80% | 1.76% | 2.84% | 2.77% | 3.31% | 2.17% | |||||||||||||||
56% | 128% | 155% | 185% | 124% | 96% |
4 Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
21
Notes to financial statements | |
Delaware Global Real Estate Opportunities Fund | April 30, 2013 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as a Delaware statutory trust and offers four series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities Fund, Delaware International Bond Fund and Delaware U.S. Growth Fund. These financial statements and related notes pertain to Delaware Global Real Estate Opportunities Fund. 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 C, Class R and Institutional Class shares. Class A shares are sold with a maximum front-end sales charge of 5.75%. Class A share purchases of $1,000,000 or more will incur a contingent deferred sales charge (CDSC) of 1% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1%, if redeemed during the first twelve months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek maximum long-term total return through a combination of current income and capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation — Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used, which approximates fair value. Securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. Foreign currency exchange contracts and forward foreign cross currency exchange contracts are valued at the mean between the bid and ask prices, which approximates fair value. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions
22
or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal & Foreign Income Taxes — No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2009–Oct. 31, 2012), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
Class Accounting — Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Repurchase Agreements — The Fund may purchase certain U.S. government securities subject to the counterparty’s agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Fund’s custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. At April 30, 2013, the Fund held no investments in repurchase agreements.
Foreign Currency Transactions — Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Fund’s prospectus. The value of all assets and liabilities denominated in foreign currencies is translated daily into U.S. dollars at the exchange rate of such currencies against the U.S. dollar. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund generally does not bifurcate that portion of realized gains and losses on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices. The changes are included with the net realized and unrealized gain or loss on investments. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
23
Notes to financial statements
Delaware Global Real Estate Opportunities Fund
1. Significant Accounting Policies (continued)
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other — Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all tax withholdings, a portion of which may be reclaimable. Withholding taxes and reclaims on foreign dividends have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares and pays distributions from net investment income and net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the six months ended April 30, 2013.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which are used to offset transfer agent fees. The expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2013, the Fund earned $3 under the agreement.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.99% on the first $100 million of average daily net assets of the Fund, 0.90% on the next $150 million, and 0.80% on average daily net assets in excess of $250 million.
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DMC has contractually agreed to waive that portion, if any, of its management fee and/or pay/reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively nonroutine expenses)) do not exceed 1.15% of the Fund’s average daily net assets through Feb. 28, 2014. For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses, as may be agreed upon from time to time by the Fund’s Board and DMC. This expense waiver and reimbursement apply only to expenses paid directly by the Fund and may only be terminated by agreement of the Fund’s Board and DMC.
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, 2013, the Fund was charged $1,785 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC a monthly asset-based fee for these services. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee of 0.25% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class C shares and 0.60% of the average daily net assets of the Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to limit distribution and service fees through Feb. 28, 2014 for Class R shares to 0.50% of average daily net assets. This waiver and reimbursement may only be terminated by agreement of the Fund’s Board and DMC.
At April 30, 2013, the Fund had liabilities payable to affiliates as follows:
Investment management fees payable to DMC | $ | 44,074 |
Dividend disbursing, transfer agent and fund accounting | ||
oversight fees and other expenses payable to DSC | 1,569 | |
Distribution fees payable to DDLP | 584 | |
Other expenses payable to DMC and affiliates* | 649 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Expenses include items such as printing of shareholder reports, legal and tax services, registration fees and trustees’ fees.
25
Notes to financial statements
Delaware Global Real Estate Opportunities Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
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, 2013, the Fund was charged $ 1,180 for internal legal and tax services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2013, DDLP earned $752 for commissions on sales of the Fund’s Class A 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, 2013, the Fund made purchases of $41,276,407 and sales of $ 63,956,519 of investment securities other than short-term investments.
At April 30, 2013, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2013, the cost of investments was $ 59,858,083. At April 30, 2013, net unrealized appreciation was $ 8,159,972, of which $10,792,918 related to unrealized appreciation of investments and $ 2,632,946 related to unrealized depreciation of investments.
U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three level hierarchy of inputs is summarized below.
Level 1 – | inputs are quoted prices in active markets for identical investments (e.g., equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) |
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Level 2 – | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) |
Level 3 – | inputs are significant unobservable inputs (including the Fund’s own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of April 30, 2013:
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Common Stock | $ | 66,948,337 | $ | — | $— | $ | 66,948,337 | |||||||
Short-Term Investments | — | 177,189 | — | 177,189 | ||||||||||
Securities Lending Collateral | — | 892,529 | — | 892,529 | ||||||||||
Total | $ | 66,948,337 | $ | 1,069,718 | $— | $ | 68,018,055 | |||||||
Foreign Currency Exchange Contract | $ | — | $ | (1,716 | ) | $— | $ | (1,716 | ) |
The securities that have been deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Fund’s net assets at the end of the period.
27
Notes to financial statements
Delaware Global Real Estate Opportunities Fund
3. Investments (continued)
During the six months ended April 30, 2013, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. This does not include transfers between Level 1 investments and Level 2 investments due to the Fund utilizing international fair value pricing during the period. In accordance with the fair valuation procedures described in Note 1, international fair value pricing uses other observable market-based inputs in place of the closing exchange price due to the events occurring after the close of the exchange or market on which the investment is principally traded, causing a change in classification between levels. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
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. GAAP. 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, 2013 and the year ended Oct. 31, 2012 was as follows:
Six Months | Year | |||
Ended | Ended | |||
4/30/13* | 10/31/12 | |||
Ordinary income | $2,167,828 | $2,051,396 |
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, 2013, the estimated components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 156,537,932 | ||
Undistributed ordinary income | 160,403 | |||
Realized gains 11/1/12–4/30/13 | 7,304,283 | |||
Capital loss carryforwards as of 10/31/12* | (105,487,995 | ) | ||
Unrealized appreciation | 8,158,645 | |||
Net assets | $ | 66,673,268 |
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The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales and tax treatment of passive foreign investment companies.
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 gain (loss) on foreign currency transactions. Results of operations and net assets were not affected by these reclassifications. For the six months ended April 30, 2013, the Fund recorded an estimate of these differences since final tax characteristics cannot be determined until fiscal year end.
Distributions in excess of net investment income | $ | (78,380 | ) | |
Accumulated net realized loss | 78,380 |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at Oct. 31, 2012 will expire as follows: $174,637 expires in 2016, $51,128,017 expires in 2017, $50,784,384 expires in 2018 and $3,400,957 expires in 2019.
On Dec. 22, 2010, the Regulated Investment Company Modernization Act of 2010 (Act) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes were generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
For the six months ended April 30, 2013, the Fund had capital gains of $ 7,304,283, which may reduce the capital loss carryforwards.
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Notes to financial statements
Delaware Global Real Estate Opportunities Fund
6. Capital Shares
Transactions in capital shares were as follows:
Six Months | Year | |||||
Ended | Ended | |||||
4/30/13 | 10/31/12 | |||||
Shares sold: | ||||||
Class A | 314,681 | 6,568 | ||||
Class C | 17,548 | 1 | ||||
Class R | — | 1 | ||||
Institutional Class | 422,725 | 7,017,753 | ||||
Shares issued upon reinvestment of dividends and distributions: | ||||||
Class A | 4,556 | 63 | ||||
Class C | 113 | — | ||||
Class R | 29 | — | ||||
Institutional Class | 326,205 | 384,662 | ||||
Shares from reorganization:* | ||||||
Class A | — | — | ||||
Institutional Class | — | — | ||||
Shares from merger:** | ||||||
Class A | — | 40,910 | ||||
Class C | — | 4,223 | ||||
Class R | — | 1,177 | ||||
Institutional Class | — | 196,323 | ||||
1,085,857 | 7,651,681 | |||||
Shares redeemed: | ||||||
Class A | (13,762 | ) | — | |||
Class C | (399 | ) | — | |||
Class R | — | (89 | ) | |||
Institutional Class | (4,309,329 | ) | (4,154,049 | ) | ||
(4,323,490 | ) | (4,154,138 | ) | |||
Net increase (decrease) | (3,237,633 | ) | 3,497,543 |
* | See Note 7. |
** | See Note 8. |
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7. Fund Reorganization
Following the close of business on Sept. 28, 2012, pursuant to a Plan of Reorganization (Reorganization), the Fund received all of the assets and liabilities of The Global Real Estate Securities Portfolio, a series of the Delaware Pooled® Trust (Portfolio). The Class P and Original Class shareholders of the Portfolio received Class A shares and Institutional Class Shares of the Fund, respectively, with an aggregate net asset value equal to the aggregate net asset value of their shares in the Portfolio immediately prior to the Reorganization, shown as in the following table:
Shares Prior to | Shares After | ||||||
Reorganization | Reorganization | Value | |||||
Class P | 1,507 | — | $ | 8,962 | |||
Class A | — | 1,507 | 8,962 | ||||
Original Class | 12,857,133 | — | 76,624,023 | ||||
Institutional Class | — | 12,857,133 | 76,624,023 |
The Reorganization was treated as a tax-free reorganization for federal income purposes and, accordingly, the basis of the assets of the Fund reflected the historical basis of the assets of the Portfolio as of the date of the Reorganization. For financial reporting purposes, the Portfolio’s operating history prior to the Reorganization is reflected in the Fund’s financial statements and financial highlights. The net assets, net unrealized appreciation and accumulated net realized loss of the Portfolio as of the close of business on Sept. 28, 2012, were as follows:
Net assets | $ | 76,632,985 | |
Accumulated net realized gain | 2,513,828 | ||
Net unrealized appreciation | 5,067,741 |
8. Fund Merger
Immediately following the Reorganization, on Sept. 28, 2012, the Fund acquired all of the assets of the Delaware Global Real Estate Securities Fund (Acquired Fund), an open-end investment company, in exchange for the shares of the Portfolio (Acquiring Fund) pursuant to a Plan and Agreement of Reorganization (Reorganization). The shareholders of the Acquired Fund received shares of the respective class of the Acquiring Fund equal to the aggregate net asset value of their share in the Acquired Fund prior to the Reorganization, shown as in the following table:
Acquiring Fund | Acquired Fund | ||||||||
Shares | Shares | Value | |||||||
Class A | 1,507 | 40,910 | $ | 243,416 | |||||
Class C | — | 4,223 | 25,156 | ||||||
Class R | — | 1,177 | 7,010 | ||||||
Institutional Class | 12,857,133 | 196,323 | 1,170,087 |
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Notes to financial statements
Delaware Global Real Estate Opportunities Fund
8. Fund Merger (continued)
The Reorganization was treated as a non-taxable event and, accordingly, the Acquired Fund’s basis in securities acquired reflected historical cost basis as of the date of transfer. The net assets, net unrealized appreciation and accumulated net realized loss of the Acquired Fund as of the close of business on Sept. 28, 2012 were as follows:
Net assets | $ | 1,445,669 | ||
Accumulated net realized loss | (1,045,838 | ) | ||
Net unrealized appreciation | 122,701 |
The net assets of the Acquiring Fund before the acquisition were $76,632,985. The net assets of the Acquiring Fund immediately following the acquisition were $78,078,653.
Assuming that the acquisition had been completed on Nov. 1, 2011, the beginning of the Acquiring Fund’s reporting period, the Acquiring Fund’s pro forma results of operations for the year ended Oct. 31, 2012 were as follows:
Net investment income | $ | 973,704 | |
Net realized gain on investments | 4,012,939 | ||
Change in unrealized appreciation | 4,206,645 | ||
Net increase in net assets resulting from operations | 9,193,288 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Acquired Fund that have been included in the Fund’s statement of operations since Oct. 1, 2012.
9. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), was a participant in a $125,000,000 revolving line of credit to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants were charged an annual commitment fee, which was allocated across the Participants on the basis of each Participant’s allocation of the entire facility. The Participants were permitted to borrow up to a maximum of one third of their net assets under the agreement. Each Participant was individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement expired on Nov. 13, 2012.
On Nov. 13, 2012, the Fund, along with the other Participants, entered into an amendment to the agreement for a $125,000,000 revolving line of credit. The agreement is to be used as described above and operates in substantially the same manner as the original agreement. The line of credit available under the agreement expires on Nov. 12, 2013. The Fund had no amounts outstanding as of April 30, 2013 or at any time during the period then ended.
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10. Derivatives
U.S. GAAP requires disclosures that enable investors to understand: 1) how and why an entity uses derivatives; 2) how they are accounted for; and 3) how they affect an entity’s results of operations and financial position.
Foreign Currency Exchange Contracts — The Fund may enter into foreign currency exchange contracts and forward foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts and forward foreign cross currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
See the statement of operations on pages 12 and 13 for the realized and unrealized gain or loss on derivatives.
Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended April 30, 2013.
Long Derivative Volume | |||
Foreign currency exchange contracts (average cost) | $ | 396,593 | |
Short Derivative Volume | |||
Foreign currency exchange contracts (average cost) | 244,104 |
33
Notes to financial statements
Delaware Global Real Estate Opportunities Fund
11. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. In Oct. 2008, BNY Mellon transferred certain distressed securities from the Fund’s previous collateral investment pool into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
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The Collective Trust used for the investment of cash collateral received from borrowers of securities seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pool’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
At April 30, 2013, the value of securities on loan was $1,140,573, for which cash collateral was received and invested in accordance with the Lending Agreement. At April 30, 2013, the value of invested collateral was $892,529. These investments are presented on the statement of net assets under the caption “Securities Lending Collateral.”
12. Credit and Market Risk
Some countries in which the Fund may invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is deterioration in a country’s balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller, less liquid, and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.
The Fund 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 REITs 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
35
Notes to financial statements
Delaware Global Real Estate Opportunities Fund
12. Credit and Market Risk (continued)
securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of April 30, 2013, there were no Rule 144A securities. Illiquid securities have been identified on the statement of net assets.
13. 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.
14. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to April 30, 2013 that would require recognition or disclosure in the Fund’s financial statements.
36
About the organization
Board of trustees | |||
Patrick P. Coyne Thomas L. Bennett | Joseph W. Chow John A. Fry Anthony D. Knerr | Lucinda S. Landreth Frances A. | Thomas K. Whitford Janet L. Yeomans J. Richard Zecher |
Affiliated officers | |||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus |
This semiannual report is for the information of Delaware Global Real Estate Opportunities Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Investments Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawareinvestments.com. |
Delaware Investments is the marketing name of Delaware Management Holdings, Inc. and its subsidiaries. The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; and (ii) on the SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Fund’s Schedule of Investments are available without charge on the Fund’s website at delawareinvestments.com. The Fund’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund’s website at delawareinvestments.com; and (ii) on the SEC’s website at sec.gov. |
37
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrant’s second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a) (1) Code of Ethics
Not applicable.
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.
Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: DELAWARE GROUP® ADVISER FUNDS
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | July 2, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | July 2, 2013 |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | July 2, 2013 |