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, 2014 |
Item 1. Reports to Stockholders
Semiannual report
Fixed income mutual fund
Delaware Diversified Income Fund
April 30, 2014
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawareinvestments.com/edelivery.
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware Diversified Income Fund at delawareinvestments.com.
Manage your investments online
• | 24-hour access to your account information |
• | Obtain share prices |
• | Check your account balance and recent transactions |
• | Request statements or literature |
• | Make purchases and redemptions |
Delaware Management Holdings, Inc. and its subsidiaries (collectively known by the marketing name of Delaware Investments) are wholly owned subsidiaries of Macquarie Group Limited, a global provider of banking, financial, advisory, investment and funds management services.
Investments in Delaware 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.
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Unless otherwise noted, views expressed herein are current as of April 30, 2014, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
©2014 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
For the six-month period from November 1, 2013 to April 30, 2014 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2013 to April 30, 2014.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect a waiver in effect for the Class B shares. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
For the six-month period from November 1, 2013 to April 30, 2014 (Unaudited)
Delaware Diversified Income Fund
Expense analysis of an investment of $1,000
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Annualized Expense Ratio | Expenses Paid During Period 11/1/13 to 4/30/14* | |||||
Actual Fund return† | ||||||||
Class A | $1,000.00 | $1,029.70 | 0.92% | $4.63 | ||||
Class B | 1,000.00 | 1,027.70 | 1.57% | 7.89 | ||||
Class C | 1,000.00 | 1,027.10 | 1.67% | 8.39 | ||||
Class R | 1,000.00 | 1,029.60 | 1.17% | 5.89 | ||||
Institutional Class | 1,000.00 | 1,032.10 | 0.67% | 3.38 | ||||
Hypothetical 5% return (5% return before expenses) | ||||||||
Class A | $1,000.00 | $1,020.23 | 0.92% | $4.61 | ||||
Class B | 1,000.00 | 1,017.01 | 1.57% | 7.85 | ||||
Class C | 1,000.00 | 1,016.51 | 1.67% | 8.35 | ||||
Class R | 1,000.00 | 1,018.99 | 1.17% | 5.86 | ||||
Institutional Class | 1,000.00 | 1,021.47 | 0.67% | 3.36 |
* | “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, 2014 (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 | 0.02% | |||
Agency Collateralized Mortgage Obligations | 2.03% | |||
Agency Mortgage-Backed Securities | 12.60% | |||
Commercial Mortgage-Backed Securities | 2.75% | |||
Convertible Bonds | 1.59% | |||
Corporate Bonds | 56.91% | |||
Automotive | 0.60% | |||
Banking | 7.63% | |||
Basic Industry | 4.58% | |||
Brokerage | 0.57% | |||
Capital Goods | 2.15% | |||
Communications. | 9.13% | |||
Consumer Cyclical | 2.82% | |||
Consumer Non-Cyclical | 3.74% | |||
Electric | 5.37% | |||
Energy | 5.47% | |||
Finance Companies. | 1.41% | |||
Healthcare | 0.93% | |||
Insurance | 2.41% | |||
Natural Gas | 3.07% | |||
Real Estate | 1.76% | |||
Services | 1.07% | |||
Technology | 2.36% | |||
Transportation | 1.22% | |||
Utilities | 0.62% | |||
Municipal Bonds | 0.62% | |||
Non-Agency Asset-Backed Securities | 0.71% | |||
Non-Agency Collateralized Mortgage Obligations | 0.99% | |||
Senior Secured Loans | 10.89% | |||
Sovereign Bonds | 2.07% | |||
Supranational Banks | 0.20% | |||
U.S. Treasury Obligations | 4.36% | |||
Common Stock | 0.00% | |||
Convertible Preferred Stock | 0.49% | |||
Preferred Stock | 0.62% | |||
Option Purchased | 0.00% |
3
Security type / sector allocation
Delaware Diversified Income Fund
Security type / sector | Percentage of net assets | |||
Short-Term Investments | 7.34% | |||
Securities Lending Collateral | 2.75% | |||
Total Value of Securities | 106.94% | |||
Obligation to Return Securities Lending Collateral | (2.75%) | |||
Liabilities Net of Receivables and Other Assets | (4.19%) | |||
Total Net Assets | 100.00% |
4
Delaware Diversified Income Fund | April 30, 2014 (Unaudited) |
Principal amount° | Value (U.S. $) | |||||||
Agency Asset-Backed Securities – 0.02% | ||||||||
Fannie Mae Grantor Trust | ||||||||
Series 2003-T4 2A5 5.407% 9/26/33 | 905,347 | $ | 994,885 | |||||
Fannie Mae Whole Loan | ||||||||
Series 2001-W2 AS5 6.473% 10/25/31 | 1,286 | 1,349 | ||||||
Series 2002-W11 AV1 0.492% 11/25/32 — | 9,049 | 8,264 | ||||||
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Total Agency Asset-Backed Securities (cost $878,041) | 1,004,498 | |||||||
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Agency Collateralized Mortgage Obligations – 2.03% | ||||||||
Fannie Mae Grantor Trust | ||||||||
Series 1999-T2 A1 7.50% 1/19/39 — | 16,772 | 18,733 | ||||||
Series 2002-T4 A3 7.50% 12/25/41 | 172,598 | 196,702 | ||||||
Series 2002-T19 A1 6.50% 7/25/42 | 124,187 | 141,848 | ||||||
Series 2004-T1 1A2 6.50% 1/25/44 | 57,305 | 65,215 | ||||||
Fannie Mae Interest Strip | ||||||||
Series 265 2 9.00% 3/1/24 | 7,886 | 9,170 | ||||||
Fannie Mae REMICs | ||||||||
Series 1990-92 C 7.00% 8/25/20 | 943 | 1,046 | ||||||
Series 1996-46 ZA 7.50% 11/25/26 | 167,932 | 191,728 | ||||||
Series 2001-50 BA 7.00% 10/25/41 | 86,377 | 98,825 | ||||||
Series 2002-83 GH 5.00% 12/25/17 | 158,732 | 167,527 | ||||||
Series 2002-90 A2 6.50% 11/25/42 | 235,859 | 267,506 | ||||||
Series 2003-11 BY 5.50% 2/25/33 | 153,855 | 169,576 | ||||||
Series 2003-26 AT 5.00% 11/25/32 | 3,671,119 | 3,808,346 | ||||||
Series 2003-38 MP 5.50% 5/25/23 | 2,566,488 | 2,814,008 | ||||||
Series 2003-78 B 5.00% 8/25/23 | 75,252 | 82,337 | ||||||
Series 2003-106 WE 4.50% 11/25/22 | 1,951,513 | 1,985,095 | ||||||
Series 2005-110 MB 5.50% 9/25/35 | 1,267,545 | 1,379,046 | ||||||
Series 2007-40 PT 5.50% 5/25/37 | 37,664 | 41,266 | ||||||
Series 2009-94 AC 5.00% 11/25/39 | 5,995,610 | 6,470,774 | ||||||
Series 2010-41 PN 4.50% 4/25/40 | 7,623,413 | 8,191,777 | ||||||
Series 2010-75 NA 4.00% 9/25/28 | 851,128 | 887,666 | ||||||
Series 2010-96 DC 4.00% 9/25/25 | 14,795,000 | 15,610,900 | ||||||
Series 2011-113 CP 5.00% 9/25/39 | 1,782,838 | 1,919,725 | ||||||
Series 2012-19 HB 4.00% 1/25/42 | 149,713 | 154,889 | ||||||
Series 2012-19 NI 3.50% 10/25/31 S | 5,639,955 | 773,030 | ||||||
Series 2012-122 SD 5.948% 11/25/42 —S | 11,326,501 | 2,529,966 | ||||||
Series 2013-20 IH 3.00% 3/25/33 S | 7,051,978 | 1,145,553 | ||||||
Series 2013-31 MI 3.00% 4/25/33 S | 35,552,049 | 5,831,645 | ||||||
Series 2013-44 DI 3.00% 5/25/33 S | 43,411,544 | 7,169,751 | ||||||
Fannie Mae Whole Loan | ||||||||
Series 2002-W1 2A 6.617% 2/25/42 — | 17,692 | 20,642 | ||||||
Series 2002-W6 2A 6.96% 6/25/42 — | 34,707 | 39,286 | ||||||
Series 2003-W1 2A 6.668% 12/25/42 — | 17,808 | 20,853 |
5
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Agency Collateralized Mortgage Obligations (continued) | ||||||||
Fannie Mae Whole Loan | ||||||||
Series 2003-W10 1A4 4.505% 6/25/43 | 24,817 | $ | 26,226 | |||||
Series 2003-W15 2A7 5.55% 8/25/43 | 12,719 | 13,552 | ||||||
Series 2004-W11 1A2 6.50% 5/25/44 | 369,076 | 426,745 | ||||||
Freddie Mac REMICs | ||||||||
Series 1730 Z 7.00% 5/15/24 | 198,298 | 225,257 | ||||||
Series 2326 ZQ 6.50% 6/15/31 | 617,515 | 688,251 | ||||||
Series 2557 WE 5.00% 1/15/18 | 1,936,828 | 2,045,368 | ||||||
Series 2621 QH 5.00% 5/15/33 | 29,614 | 31,734 | ||||||
Series 2624 QH 5.00% 6/15/33 | 30,991 | 33,157 | ||||||
Series 2717 MH 4.50% 12/15/18 | 53,955 | 57,055 | ||||||
Series 2762 LG 5.00% 9/15/32 | 615,093 | 618,267 | ||||||
Series 2809 DC 4.50% 6/15/19 | 1,051,169 | 1,108,381 | ||||||
Series 3123 HT 5.00% 3/15/26 | 38,915 | 41,865 | ||||||
Series 3150 EQ 5.00% 5/15/26 | 45,000 | 49,448 | ||||||
Series 3173 PE 6.00% 4/15/35 | 16,340 | 16,355 | ||||||
Series 3232 KF 0.602% 10/15/36 — | 92,222 | 92,509 | ||||||
Series 3290 PE 5.50% 3/15/37 | 440,554 | 485,843 | ||||||
Series 3416 GK 4.00% 7/15/22 | 58,586 | 59,745 | ||||||
Series 3574 D 5.00% 9/15/39 | 291,980 | 316,398 | ||||||
Series 3656 PM 5.00% 4/15/40 | 11,118,918 | 12,020,518 | ||||||
Series 3804 EH 3.50% 7/15/40 | 165,883 | 175,895 | ||||||
Series 4065 DE 3.00% 6/15/32 | 1,626,000 | 1,598,371 | ||||||
Series 4122 LI 3.00% 10/15/27 S | 1,106,864 | 142,225 | ||||||
Series 4185 LI 3.00% 3/15/33 S | 11,269,939 | 1,859,263 | ||||||
Series 4191 CI 3.00% 4/15/33 S | 4,404,416 | 755,259 | ||||||
Series 4217 HI 2.50% 6/15/28 S | 1,670,424 | 194,146 | ||||||
Series 4251 KI 2.50% 4/15/28 S | 901,398 | 85,376 | ||||||
Freddie Mac Strips | ||||||||
Series 19 F 1.034% 6/1/28 — | 4,658 | 4,454 | ||||||
Freddie Mac Structured Agency Credit Risk Debt Notes | ||||||||
Series 2014-DN2 M2 1.802% 4/25/24 — | 1,505,000 | 1,514,776 | ||||||
Freddie Mac Structured Pass Through Securities | ||||||||
Series T-42 A5 7.50% 2/25/42 ¿ | 101,970 | 119,210 | ||||||
Series T-54 2A 6.50% 2/25/43 ¿ | 27,568 | 32,432 | ||||||
Series T-58 2A 6.50% 9/25/43 ¿ | 620,763 | 702,890 | ||||||
Series T-60 1A4C 4.766% 3/25/44 ¿— | 4,302 | 4,333 | ||||||
GNMA | ||||||||
Series 2010-113 KE 4.50% 9/20/40 | 20,392,264 | 21,694,004 | ||||||
NCUA Guaranteed Notes Trust | ||||||||
Series 2010-C1 A2 2.90% 10/29/20 | 6,280,000 | 6,518,791 |
6
Principal amount° | Value (U.S. $) | |||||||
Agency Collateralized Mortgage Obligations (continued) | ||||||||
Vendee Mortgage Trust | ||||||||
Series 2000-1 1A 6.482% 1/15/30 — | 6,654 | $ | 7,563 | |||||
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Total Agency Collateralized Mortgage Obligations (cost $113,906,929) | 115,970,093 | |||||||
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Agency Mortgage-Backed Securities – 12.60% | ||||||||
Fannie Mae | ||||||||
5.50% 1/1/36 | 738,832 | 824,378 | ||||||
6.00% 9/1/17 | 6,065 | 6,465 | ||||||
6.50% 8/1/17 | 63,910 | 66,950 | ||||||
7.00% 11/15/16 | 2,902 | 2,910 | ||||||
Fannie Mae ARM | ||||||||
1.867% 7/1/33 — | 70,214 | 74,762 | ||||||
1.951% 1/1/36 — | 81,862 | 86,790 | ||||||
1.994% 11/1/24 — | 2,633 | 2,746 | ||||||
2.138% 3/1/38 — | 10,149 | 10,770 | ||||||
2.235% 9/1/38 — | 485,131 | 518,099 | ||||||
2.274% 12/1/33 — | 4,112 | 4,318 | ||||||
2.277% 10/1/33 — | 81,048 | 83,654 | ||||||
2.292% 8/1/34 — | 6,679 | 7,013 | ||||||
2.304% 4/1/36 — | 752 | 806 | ||||||
2.34% 11/1/32 — | 494 | 529 | ||||||
2.384% 11/1/35 — | 117,071 | 124,192 | ||||||
2.392% 11/1/33 — | 78,562 | 81,888 | ||||||
2.397% 6/1/34 — | 86,880 | 92,118 | ||||||
2.407% 4/1/36 — | 413,512 | 435,115 | ||||||
2.411% 5/1/43 — | 6,279,703 | 6,199,379 | ||||||
2.412% 6/1/37 — | 9,409 | 10,138 | ||||||
2.416% 8/1/36 — | 27,757 | 29,811 | ||||||
2.44% 11/1/35 — | 453,201 | 482,596 | ||||||
2.442% 4/1/37 — | 1,139,624 | 1,216,480 | ||||||
2.486% 4/1/36 — | 270,905 | 288,211 | ||||||
2.515% 6/1/36 — | 118,032 | 128,488 | ||||||
2.518% 7/1/36 — | 2,265 | 2,476 | ||||||
2.527% 6/1/34 — | 1,473 | 1,566 | ||||||
2.527% 7/1/36 — | 55,058 | 59,658 | ||||||
2.546% 6/1/43 — | 1,446,290 | 1,438,188 | ||||||
3.293% 9/1/43 — | 5,466,350 | 5,601,054 | ||||||
5.061% 5/1/36 — | 162,902 | 177,182 | ||||||
5.142% 8/1/35 — | 76,229 | 81,959 | ||||||
5.817% 8/1/37 — | 540,161 | 580,376 | ||||||
Fannie Mae Relocation 15 yr | ||||||||
4.00% 9/1/20 | 163,317 | 170,026 |
7
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Fannie Mae Relocation 30 yr | ||||||||
5.00% 9/1/33 | 190,229 | $ | 206,529 | |||||
5.00% 11/1/33 | 57,165 | 62,034 | ||||||
5.00% 1/1/34 | 2,049 | 2,226 | ||||||
5.00% 11/1/34 | 34,949 | 37,965 | ||||||
5.00% 4/1/35 | 112,099 | 121,754 | ||||||
5.00% 10/1/35 | 92,122 | 100,004 | ||||||
5.00% 1/1/36 | 159,668 | 173,372 | ||||||
Fannie Mae S.F. 15 yr | ||||||||
2.50% 7/1/27 | 820,796 | 828,595 | ||||||
2.50% 9/1/27 | 3,183,820 | 3,214,066 | ||||||
2.50% 10/1/27 | 5,231,830 | 5,281,560 | ||||||
2.50% 11/1/27 | 275,703 | 278,330 | ||||||
2.50% 2/1/28 | 12,264,651 | 12,379,598 | ||||||
2.50% 4/1/28 | 87,660 | 88,291 | ||||||
2.50% 5/1/28 | 2,122,488 | 2,137,774 | ||||||
3.00% 3/1/27 | 6,483,330 | 6,697,105 | ||||||
3.00% 4/1/27 | 1,188,018 | 1,227,124 | ||||||
3.00% 6/1/27 | 87,850 | 90,753 | ||||||
3.00% 8/1/27 | 378,560 | 391,360 | ||||||
3.00% 11/1/27 | 1,456,884 | 1,505,468 | ||||||
3.00% 5/1/28 | 1,398,287 | 1,445,404 | ||||||
3.50% 7/1/26 | 5,320,202 | 5,606,551 | ||||||
3.50% 3/1/27 | 175,418 | 184,847 | ||||||
3.50% 11/1/27 | 570,399 | 601,409 | ||||||
3.50% 11/1/28 | 434,680 | 458,284 | ||||||
4.00% 3/1/24 | 34,551 | 36,702 | ||||||
4.00% 11/1/24 | 20,515 | 21,983 | ||||||
4.00% 2/1/25 | 891,519 | 947,122 | ||||||
4.00% 5/1/25 | 2,184,233 | 2,323,761 | ||||||
4.00% 6/1/25 | 7,958,559 | 8,464,461 | ||||||
4.00% 11/1/25 | 14,487,018 | 15,458,998 | ||||||
4.00% 12/1/26 | 3,726,470 | 3,958,815 | ||||||
4.00% 5/1/27 | 7,719,137 | 8,211,567 | ||||||
4.50% 4/1/18 | 13,677 | 14,521 | ||||||
4.50% 9/1/18 | 10,344 | 10,982 | ||||||
4.50% 3/1/19 | 96,791 | 102,759 | ||||||
4.50% 4/1/20 | 7,703 | 8,181 | ||||||
4.50% 7/1/20 | 103,757 | 110,214 | ||||||
5.00% 11/1/18 | 204,988 | 217,506 | ||||||
5.00% 6/1/19 | 111,732 | 118,655 | ||||||
5.00% 9/1/20 | 4,516 | 4,866 | ||||||
5.00% 5/1/21 | 448,927 | 479,258 |
8
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Fannie Mae S.F. 15 yr | ||||||||
5.00% 12/1/21 | 28,501 | $ | 30,427 | |||||
5.50% 2/1/18 | 46,967 | 50,201 | ||||||
5.50% 3/1/18 | 3,037 | 3,227 | ||||||
5.50% 11/1/18 | 8,515 | 9,099 | ||||||
5.50% 12/1/18 | 73,480 | 78,093 | ||||||
5.50% 5/1/19 | 64,599 | 68,667 | ||||||
5.50% 10/1/21 | 8,714 | 9,497 | ||||||
5.50% 4/1/23 | 92,093 | 100,461 | ||||||
5.50% 6/1/23 | 59,996 | 65,434 | ||||||
6.00% 12/1/16 | 12,546 | 13,097 | ||||||
6.00% 8/1/17 | 26,255 | 27,399 | ||||||
6.00% 12/1/17 | 4,078 | 4,258 | ||||||
6.00% 9/1/19 | 174,540 | 185,875 | ||||||
6.00% 12/1/20 | 28,374 | 30,085 | ||||||
6.00% 3/1/21 | 1,185 | 1,285 | ||||||
6.00% 9/1/21 | 2,774,147 | 3,068,917 | ||||||
6.00% 2/1/22 | 52,691 | 56,652 | ||||||
6.00% 8/1/22 | 39,839 | 43,639 | ||||||
6.00% 2/1/23 | 4,884 | 5,406 | ||||||
Fannie Mae S.F. 15 yr TBA | ||||||||
2.50% 5/1/29 | 54,108,000 | 54,446,175 | ||||||
2.50% 6/1/29 | 23,365,000 | 23,448,968 | ||||||
3.00% 5/1/29 | 56,849,000 | 58,665,502 | ||||||
3.50% 5/1/29 | 13,737,000 | 14,466,778 | ||||||
3.50% 6/1/29 | 18,449,000 | 19,380,099 | ||||||
Fannie Mae S.F. 20 yr | ||||||||
3.00% 8/1/33 | 177,928 | 179,185 | ||||||
3.00% 9/1/33 | 85,122 | 85,724 | ||||||
3.50% 11/1/31 | 61,268 | 63,750 | ||||||
3.50% 4/1/32 | 25,154 | 26,175 | ||||||
3.50% 5/1/32 | 25,112 | 26,135 | ||||||
4.00% 1/1/31 | 47,493 | 50,537 | ||||||
4.00% 2/1/31 | 3,021,156 | 3,212,856 | ||||||
4.50% 9/1/23 | 922,464 | 990,308 | ||||||
4.50% 4/1/24 | 8,946 | 9,598 | ||||||
5.00% 11/1/23 | 537,788 | 589,274 | ||||||
5.00% 12/1/23 | 194,313 | 212,959 | ||||||
5.00% 3/1/28 | 50,070 | 54,814 | ||||||
5.50% 7/1/23 | 131,731 | 145,482 | ||||||
5.50% 2/1/24 | 267,131 | 295,022 | ||||||
5.50% 12/1/24 | 384,233 | 424,546 | ||||||
5.50% 1/1/25 | 263,944 | 291,455 |
9
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Fannie Mae S.F. 20 yr | ||||||||
5.50% 2/1/25 | 47,011 | $ | 51,960 | |||||
5.50% 7/1/25 | 38,261 | 42,602 | ||||||
5.50% 11/1/25 | 343,993 | 384,656 | ||||||
5.50% 3/1/27 | 129,470 | 143,969 | ||||||
5.50% 3/1/28 | 139,636 | 154,965 | ||||||
5.50% 8/1/28 | 2,077,705 | 2,305,096 | ||||||
5.50% 12/1/29 | 590,573 | 655,018 | ||||||
6.00% 10/1/21 | 10,925 | 12,251 | ||||||
6.00% 9/1/29 | 2,787,226 | 3,133,684 | ||||||
6.50% 10/1/18 | 2,865 | 3,222 | ||||||
6.50% 10/1/27 | 42,418 | 47,747 | ||||||
Fannie Mae S.F. 30 yr | ||||||||
3.00% 7/1/42 | 3,637,227 | 3,547,837 | ||||||
3.00% 10/1/42 | 57,548,210 | 56,140,026 | ||||||
3.00% 12/1/42 | 10,313,907 | 10,060,105 | ||||||
3.00% 1/1/43 | 17,536,852 | 17,105,237 | ||||||
3.00% 2/1/43 | 2,006,167 | 1,956,791 | ||||||
3.00% 4/1/43 | 14,776,086 | 14,412,835 | ||||||
3.00% 5/1/43 | 3,118,631 | 3,042,389 | ||||||
3.50% 4/1/42 | 11,177 | 11,355 | ||||||
3.50% 7/1/42 | 717,887 | 729,318 | ||||||
3.50% 9/1/42 | 571,447 | 580,624 | ||||||
3.50% 1/1/43 | 796,093 | 808,771 | ||||||
4.00% 11/1/40 | 2,177,730 | 2,283,322 | ||||||
4.00% 1/1/41 | 10,163,386 | 10,655,945 | ||||||
4.00% 2/1/41 | 21,810 | 22,862 | ||||||
4.00% 10/1/41 | 31,572 | 33,097 | ||||||
4.00% 12/1/41 | 11,732 | 12,299 | ||||||
4.00% 1/1/43 | 4,672,114 | 4,897,693 | ||||||
4.00% 5/1/43 | 594,797 | 624,738 | ||||||
4.00% 8/1/43 | 1,514,150 | 1,587,910 | ||||||
4.50% 7/1/36 | 1,696,050 | 1,821,053 | ||||||
4.50% 4/1/40 | 2,039,314 | 2,191,278 | ||||||
4.50% 11/1/40 | 4,949,775 | 5,320,029 | ||||||
4.50% 12/1/40 | 1,803,773 | 1,938,425 | ||||||
4.50% 2/1/41 | 2,378,527 | 2,556,161 | ||||||
4.50% 3/1/41 | 10,413,799 | 11,189,936 | ||||||
4.50% 4/1/41 | 131,077 | 140,858 | ||||||
4.50% 5/1/41 | 5,422,049 | 5,846,010 | ||||||
4.50% 8/1/41 | 3,393 | 3,645 | ||||||
4.50% 10/1/41 | 7,185,622 | 7,721,499 | ||||||
4.50% 11/1/41 | 5,241,921 | 5,628,863 |
10
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Fannie Mae S.F. 30 yr | ||||||||
4.50% 9/1/43 | 4,368,314 | $ | 4,691,385 | |||||
4.50% 2/1/44 | 1,192,264 | 1,282,072 | ||||||
5.00% 4/1/33 | 137,384 | 151,562 | ||||||
5.00% 7/1/33 | 141,475 | 155,984 | ||||||
5.00% 11/1/33 | 153,839 | 169,680 | ||||||
5.00% 3/1/34 | 72,242 | 79,648 | ||||||
5.00% 4/1/34 | 318,769 | 351,229 | ||||||
5.00% 4/1/35 | 738,142 | 812,293 | ||||||
5.00% 5/1/35 | 30,725 | 33,758 | ||||||
5.00% 6/1/35 | 4,562 | 5,019 | ||||||
5.00% 7/1/35 | 1,730,860 | 1,901,483 | ||||||
5.00% 8/1/35 | 773,295 | 850,269 | ||||||
5.00% 9/1/35 | 5,735 | 6,324 | ||||||
5.00% 10/1/35 | 3,856,196 | 4,238,876 | ||||||
5.00% 11/1/35 | 1,657,680 | 1,822,444 | ||||||
5.00% 8/1/36 | 7,803 | 8,582 | ||||||
5.00% 12/1/36 | 9,346 | 10,271 | ||||||
5.00% 4/1/37 | 968,390 | 1,064,000 | ||||||
5.00% 8/1/37 | 331,262 | 364,158 | ||||||
5.00% 2/1/38 | 1,071,861 | 1,178,665 | ||||||
5.00% 6/1/39 | 366,359 | 402,746 | ||||||
5.50% 2/1/33 | 3,487,794 | 3,885,930 | ||||||
5.50% 3/1/34 | 275,055 | 306,320 | ||||||
5.50% 4/1/34 | 1,228,806 | 1,368,293 | ||||||
5.50% 5/1/34 | 513,298 | 571,028 | ||||||
5.50% 11/1/34 | 1,197,405 | 1,334,392 | ||||||
5.50% 12/1/34 | 781,888 | 870,676 | ||||||
5.50% 1/1/35 | 3,163,543 | 3,524,359 | ||||||
5.50% 2/1/35 | 861,040 | 958,239 | ||||||
5.50% 3/1/35 | 638,506 | 710,738 | ||||||
5.50% 4/1/35 | 3,149 | 3,503 | ||||||
5.50% 6/1/35 | 1,078,052 | 1,194,465 | ||||||
5.50% 8/1/35 | 236,961 | 263,782 | ||||||
5.50% 9/1/35 | 3,582 | 3,987 | ||||||
5.50% 10/1/35 | 998,943 | 1,110,810 | ||||||
5.50% 11/1/35 | 10,813 | 12,007 | ||||||
5.50% 12/1/35 | 300,694 | 335,301 | ||||||
5.50% 3/1/36 | 49,475 | 54,912 | ||||||
5.50% 4/1/36 | 71,060 | 78,871 | ||||||
5.50% 5/1/36 | 168,304 | 186,793 | ||||||
5.50% 7/1/36 | 407,406 | 453,862 | ||||||
5.50% 9/1/36 | 245,464 | 273,311 |
11
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Fannie Mae S.F. 30 yr | ||||||||
5.50% 11/1/36 | 340,432 | $ | 376,119 | |||||
5.50% 12/1/36 | 149,416 | 164,922 | ||||||
5.50% 1/1/37 | 241,712 | 269,123 | ||||||
5.50% 2/1/37 | 9,442 | 10,436 | ||||||
5.50% 8/1/37 | 2,952,692 | 3,287,996 | ||||||
5.50% 1/1/38 | 184,208 | 204,464 | ||||||
5.50% 2/1/38 | 1,197,337 | 1,334,043 | ||||||
5.50% 5/1/38 | 135,116 | 149,334 | ||||||
5.50% 6/1/38 | 220,630 | 243,740 | ||||||
5.50% 10/1/39 | 3,405,693 | 3,758,951 | ||||||
5.50% 7/1/40 | 3,187,155 | 3,521,950 | ||||||
5.50% 4/1/41 | 1,813,591 | 2,018,579 | ||||||
6.00% 7/1/27 | 8,361 | 9,334 | ||||||
6.00% 4/1/32 | 17,627 | 19,914 | ||||||
6.00% 8/1/34 | 393,734 | 443,928 | ||||||
6.00% 11/1/34 | 20,300 | 22,895 | ||||||
6.00% 12/1/34 | 4,472 | 5,039 | ||||||
6.00% 6/1/35 | 3,367 | 3,757 | ||||||
6.00% 7/1/35 | 90,408 | 101,684 | ||||||
6.00% 9/1/35 | 155,891 | 175,657 | ||||||
6.00% 10/1/35 | 62,063 | 70,000 | ||||||
6.00% 11/1/35 | 34,413 | 38,796 | ||||||
6.00% 12/1/35 | 710,502 | 801,173 | ||||||
6.00% 7/1/36 | 32,884 | 36,890 | ||||||
6.00% 8/1/36 | 317,075 | 354,502 | ||||||
6.00% 9/1/36 | 212,730 | 238,481 | ||||||
6.00% 2/1/37 | 1,282,296 | 1,437,287 | ||||||
6.00% 3/1/37 | 28,757 | 32,168 | ||||||
6.00% 5/1/37 | 8,057 | 8,986 | ||||||
6.00% 7/1/37 | 8,685 | 9,795 | ||||||
6.00% 8/1/37 | 3,365,347 | 3,771,763 | ||||||
6.00% 9/1/37 | 473,358 | 530,471 | ||||||
6.00% 11/1/37 | 552,593 | 618,429 | ||||||
6.00% 1/1/38 | 175,028 | 196,312 | ||||||
6.00% 3/1/38 | 1,395 | 1,563 | ||||||
6.00% 5/1/38 | 648,392 | 725,018 | ||||||
6.00% 6/1/38 | 475,533 | 532,560 | ||||||
6.00% 8/1/38 | 391,073 | 437,730 | ||||||
6.00% 10/1/38 | 5,466,802 | 6,105,021 | ||||||
6.00% 12/1/38 | 11,884 | 13,298 | ||||||
6.00% 1/1/39 | 2,194,460 | 2,450,465 | ||||||
6.00% 9/1/39 | 402,360 | 449,013 |
12
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Fannie Mae S.F. 30 yr | ||||||||
6.00% 3/1/40 | 1,318,513 | $ | 1,471,351 | |||||
6.00% 9/1/40 | 1,663,359 | 1,862,809 | ||||||
6.00% 5/1/41 | 27,506 | 30,757 | ||||||
6.50% 3/1/32 | 205 | 230 | ||||||
6.50% 8/1/34 | 5,307 | 5,975 | ||||||
6.50% 1/1/36 | 48,783 | 54,803 | ||||||
6.50% 2/1/36 | 1,351,453 | 1,543,637 | ||||||
6.50% 3/1/36 | 69,415 | 79,348 | ||||||
6.50% 8/1/36 | 170,614 | 191,699 | ||||||
6.50% 9/1/36 | 6,849 | 7,704 | ||||||
6.50% 11/1/36 | 493,960 | 555,542 | ||||||
6.50% 3/1/37 | 19,826 | 22,285 | ||||||
6.50% 8/1/37 | 96,307 | 109,128 | ||||||
6.50% 9/1/37 | 1,079,555 | 1,212,793 | ||||||
6.50% 11/1/37 | 2,126 | 2,390 | ||||||
6.50% 12/1/37 | 421,670 | 474,140 | ||||||
6.50% 1/1/38 | 3,487 | 3,918 | ||||||
6.50% 10/1/38 | 51,391 | 58,101 | ||||||
6.50% 6/1/39 | 8,689 | 9,771 | ||||||
7.00% 8/1/32 | 70,972 | 79,841 | ||||||
7.00% 9/1/32 | 39,411 | 42,185 | ||||||
7.00% 2/1/36 | 15,555 | 17,918 | ||||||
7.00% 4/1/37 | 10,874 | 12,138 | ||||||
7.00% 12/1/37 | 6,836 | 7,711 | ||||||
7.50% 1/1/31 | 1,417 | 1,698 | ||||||
7.50% 3/1/32 | 23,410 | 27,172 | ||||||
7.50% 4/1/32 | 16,912 | 19,332 | ||||||
7.50% 6/1/34 | 26,182 | 30,064 | ||||||
7.50% 10/1/34 | 17,597 | 20,155 | ||||||
Fannie Mae S.F. 30 yr TBA | ||||||||
3.00% 6/1/44 | 1,336,000 | 1,298,007 | ||||||
3.50% 6/1/44 | 36,646,000 | 37,066,857 | ||||||
4.00% 5/1/44 | 2,570,000 | 2,692,577 | ||||||
4.00% 6/1/44 | 8,229,000 | 8,591,912 | ||||||
4.50% 5/1/44 | 4,550,000 | 4,884,852 | ||||||
4.50% 6/1/44 | 35,309,000 | 37,780,634 | ||||||
Freddie Mac ARM | ||||||||
2.265% 10/1/36 — | 58,509 | 62,933 | ||||||
2.313% 8/1/37 — | 8,033 | 8,548 | ||||||
2.342% 12/1/33 — | 260,197 | 276,563 | ||||||
2.349% 4/1/33 — | 2,094 | 2,119 | ||||||
2.358% 2/1/37 — | 643,113 | 694,005 |
13
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Freddie Mac ARM | ||||||||
2.36% 12/1/33 — | 47,582 | $ | 50,274 | |||||
2.453% 3/1/36 — | 89,653 | 95,267 | ||||||
2.464% 4/1/34 — | 21,707 | 23,141 | ||||||
2.489% 5/1/35 — | 254,257 | 269,914 | ||||||
2.49% 7/1/36 — | 303,406 | 323,590 | ||||||
2.537% 1/1/44 — | 4,744,528 | 4,851,146 | ||||||
6.055% 10/1/37 — | 3,649 | 3,820 | ||||||
6.239% 10/1/37 — | 106,568 | 112,392 | ||||||
Freddie Mac Relocation 15 yr | ||||||||
3.50% 10/1/18 | 46,251 | 46,977 | ||||||
Freddie Mac Relocation 30 yr | ||||||||
5.00% 9/1/33 | 171,389 | 186,290 | ||||||
6.50% 10/1/30 | 687 | 735 | ||||||
Freddie Mac S.F. 15 yr | ||||||||
3.00% 12/1/26 | 167,419 | 172,782 | ||||||
3.50% 10/1/26 | 1,107,309 | 1,165,824 | ||||||
4.00% 12/1/20 | 68,242 | 72,404 | ||||||
4.00% 11/1/26 | 2,189,054 | 2,326,566 | ||||||
4.50% 5/1/20 | 960,153 | 1,019,847 | ||||||
4.50% 7/1/25 | 743,630 | 797,878 | ||||||
4.50% 6/1/26 | 1,672,441 | 1,794,018 | ||||||
5.00% 6/1/18 | 325,584 | 345,204 | ||||||
5.00% 4/1/20 | 435,070 | 461,456 | ||||||
5.00% 7/1/23 | 121,978 | 132,716 | ||||||
5.50% 7/1/14 | 54 | 57 | ||||||
5.50% 6/1/20 | 1,099,718 | 1,184,684 | ||||||
5.50% 6/1/21 | 158,580 | 173,008 | ||||||
5.50% 7/1/21 | 141,964 | 154,864 | ||||||
6.00% 4/1/17 | 6,014 | 6,261 | ||||||
6.00% 8/1/17 | 3,414 | 3,609 | ||||||
6.50% 8/1/16 | 512 | 531 | ||||||
Freddie Mac S.F. 20 yr | ||||||||
3.50% 1/1/34 | 4,508,440 | 4,676,609 | ||||||
5.00% 10/1/23 | 64,734 | 70,795 | ||||||
5.00% 3/1/24 | 521,153 | 569,934 | ||||||
5.00% 9/1/25 | 2,874,472 | 3,142,433 | ||||||
5.00% 12/1/29 | 193,188 | 212,239 | ||||||
5.50% 1/1/23 | 14,709 | 16,205 | ||||||
Freddie Mac S.F. 30 yr | ||||||||
3.00% 10/1/42 | 4,624,377 | 4,521,111 | ||||||
3.00% 11/1/42 | 5,370,079 | 5,259,847 | ||||||
3.50% 11/1/41 | 196,674 | 200,000 |
14
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
Freddie Mac S.F. 30 yr | ||||||||
3.50% 4/1/42 | 61,929 | $ | 62,890 | |||||
4.00% 11/1/40 | 4,008,335 | 4,196,430 | ||||||
4.00% 12/1/40 | 603,763 | 632,067 | ||||||
4.00% 2/1/41 | 193,709 | 202,822 | ||||||
4.00% 2/1/42 | 2,318,397 | 2,427,458 | ||||||
4.50% 7/1/39 | 1,166,678 | 1,253,929 | ||||||
4.50% 10/1/39 | 6,720,099 | 7,221,333 | ||||||
4.50% 3/1/42 | 10,647,949 | 11,448,254 | ||||||
4.50% 10/1/43 | 2,017,211 | 2,170,411 | ||||||
5.00% 3/1/34 | 111,925 | 122,953 | ||||||
5.00% 4/1/35 | 36,427 | 39,988 | ||||||
5.00% 6/1/36 | 22,832 | 25,006 | ||||||
5.50% 1/1/35 | 4,007 | 4,451 | ||||||
5.50% 2/1/35 | 15,331 | 17,000 | ||||||
5.50% 3/1/36 | 289,456 | 320,328 | ||||||
5.50% 6/1/36 | 314,046 | 347,346 | ||||||
5.50% 11/1/36 | 520,039 | 572,656 | ||||||
5.50% 12/1/36 | 153,286 | 168,911 | ||||||
5.50% 1/1/37 | 23,013 | 25,410 | ||||||
5.50% 6/1/38 | 321,354 | 353,453 | ||||||
5.50% 3/1/40 | 1,742,978 | 1,917,078 | ||||||
5.50% 8/1/40 | 1,378,781 | 1,516,955 | ||||||
5.50% 1/1/41 | 1,400,339 | 1,540,215 | ||||||
5.50% 6/1/41 | 103,688 | 114,045 | ||||||
6.00% 12/1/33 | 15,914 | 17,966 | ||||||
6.00% 11/1/34 | 63,955 | 71,248 | ||||||
6.00% 2/1/36 | 2,394,669 | 2,693,523 | ||||||
6.00% 10/1/36 | 2,729 | 3,061 | ||||||
6.00% 10/1/37 | 19,399 | 21,577 | ||||||
6.00% 6/1/38 | 12,229 | 13,597 | ||||||
6.00% 7/1/38 | 27,859 | 31,133 | ||||||
6.00% 8/1/38 | 4,535,394 | 5,084,067 | ||||||
6.00% 5/1/40 | 764,444 | 851,185 | ||||||
6.50% 10/1/32 | 1,635 | 1,840 | ||||||
6.50% 8/1/36 | 384 | 431 | ||||||
6.50% 6/1/37 | 7,561 | 8,493 | ||||||
6.50% 8/1/38 | 494,525 | 555,250 | ||||||
6.50% 9/1/38 | 1,189 | 1,341 | ||||||
7.00% 11/1/33 | 202,627 | 233,304 | ||||||
GNMA I S.F. 30 yr | ||||||||
7.00% 5/15/28 | 119,526 | 141,040 | ||||||
7.00% 12/15/34 | 2,415,675 | 2,843,068 |
15
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Agency Mortgage-Backed Securities (continued) | ||||||||
GNMA I S.F. 30 yr | ||||||||
7.50% 10/15/30 | 1,483 | $ | 1,680 | |||||
7.50% 2/15/32 | 405 | 494 | ||||||
9.50% 9/15/17 | 2,046 | 2,196 | ||||||
10.00% 7/15/17 | 2,095 | 2,107 | ||||||
|
| |||||||
Total Agency Mortgage-Backed Securities (cost $717,275,097) | 720,326,620 | |||||||
|
| |||||||
Commercial Mortgage-Backed Securities – 2.75% | ||||||||
Banc of America Commercial Mortgage Trust | ||||||||
Series 2007-4 AM 6.015% 2/10/51 — | 1,400,000 | 1,573,516 | ||||||
CD1 Commercial Mortgage Trust | ||||||||
Series 2005-CD1 C 5.402% 7/15/44 — | 3,615,000 | 3,750,830 | ||||||
Citigroup Commercial Mortgage Trust | ||||||||
Series 2012-GC8 A4 3.024% 9/10/45 | 4,450,000 | 4,372,637 | ||||||
Commercial Mortgage Pass Through Certificates | ||||||||
Series 2014-LC15 A4 4.006% 4/10/47 ¿ | 5,970,000 | 6,195,206 | ||||||
Credit Suisse Commercial Mortgage Trust | ||||||||
Series 2006-C1 AAB 5.644% 2/15/39 — | 158,849 | 161,245 | ||||||
DB-UBS Mortgage Trust | ||||||||
Series 2011-LC1A A3 144A 5.002% 11/10/46 # | 11,604,000 | 13,041,886 | ||||||
FREMF Mortgage Trust | ||||||||
Series 2010-K7 B 144A 5.618% 4/25/20 #— | 2,860,000 | 3,191,746 | ||||||
Series 2012-K19 B 144A 4.176% 5/25/45 #— | 1,085,963 | 1,095,279 | ||||||
Series 2012-K22 B 144A 3.812% 8/25/45 #— | 3,250,000 | 3,181,639 | ||||||
Series 2012-K708 B 144A 3.891% 2/25/45 #— | 9,575,000 | 9,834,004 | ||||||
General Electric Capital Commercial Mortgage | ||||||||
Series 2005-C4 A4 5.489% 11/10/45 — | 108,000 | 113,853 | ||||||
Goldman Sachs Mortgage Securities II | ||||||||
Series 2005-GG4 A4A 4.751% 7/10/39 | 6,713,680 | 6,887,705 | ||||||
Series 2006-GG6 A4 5.553% 4/10/38 — | 8,405,000 | 8,924,429 | ||||||
Series 2010-C1 A2 144A 4.592% 8/10/43 # | 9,975,000 | 10,973,398 | ||||||
Series 2010-C1 C 144A 5.635% 8/10/43 #— | 4,640,000 | 5,149,532 | ||||||
Hilton USA Trust | ||||||||
Series 2013-HLT AFX 144A 2.662% 11/5/30 # | 3,945,000 | 3,975,570 | ||||||
JPMorgan Chase Commercial Mortgage Securities Trust | ||||||||
Series 2005-CB11 E 5.641% 8/12/37 — | 1,685,000 | 1,816,381 | ||||||
Series 2005-LDP5 D 5.56% 12/15/44 — | 2,750,000 | 2,877,507 | ||||||
Series 2006-LDP8 AM 5.44% 5/15/45 | 6,732,000 | 7,344,969 | ||||||
Series 2011-C5 A3 4.171% 8/15/46 | 5,445,000 | 5,845,039 | ||||||
Series 2011-C5 C 144A 5.502% 8/15/46 #— | 3,165,000 | 3,481,415 | ||||||
Lehman Brothers-UBS Commercial Mortgage Trust | ||||||||
Series 2004-C1 A4 4.568% 1/15/31 | 633,243 | 656,175 | ||||||
Series 2005-C3 B 4.895% 7/15/40 — | 2,980,000 | 3,053,675 |
16
Principal amount° | Value (U.S. $) | |||||||
Commercial Mortgage-Backed Securities (continued) | ||||||||
Merrill Lynch Mortgage Trust | ||||||||
Series 2005-CIP1 A2 4.96% 7/12/38 | 42,912 | $ | 42,868 | |||||
Morgan Stanley Capital I Trust | ||||||||
Series 2005-HQ7 AJ 5.376% 11/14/42 — | 5,035,000 | 5,279,993 | ||||||
Series 2005-HQ7 C 5.376% 11/14/42 — | 13,733,000 | 13,604,088 | ||||||
Series 2006-T21 B 144A 5.455% 10/12/52 #— | 2,000,000 | 2,092,658 | ||||||
Series 2007-T27 A4 5.831% 6/11/42 — | 5,710,500 | 6,388,650 | ||||||
Timberstar Trust | ||||||||
Series 2006-1A A 144A 5.668% 10/15/36 # | 9,295,000 | 10,069,078 | ||||||
Series 2006-1A C 144A 5.884% 10/15/36 # | 4,500,000 | 4,849,965 | ||||||
VNO Mortgage Trust | ||||||||
Series 2012-6AVE A 144A 2.996% 11/15/30 # | 4,075,000 | 3,954,963 | ||||||
WF-RBS Commercial Mortgage Trust | ||||||||
Series 2014-C20 A5 3.995% 5/15/47 | 3,580,000 | 3,687,253 | ||||||
|
| |||||||
Total Commercial Mortgage-Backed Securities (cost $157,388,383) | 157,467,152 | |||||||
|
| |||||||
Convertible Bonds – 1.59% | ||||||||
Alaska Communications Systems Group 144A 6.25% exercise price $10.28, expiration date 4/27/18 # | 5,531,000 | 4,701,350 | ||||||
Alere 3.00% exercise price $43.98, expiration date 5/15/16 | 2,169,000 | 2,354,721 | ||||||
Ares Capital 5.75% exercise price $19.13, expiration date 2/1/16 * | 1,209,000 | 1,314,787 | ||||||
ArvinMeritor 4.00% exercise price $26.73, expiration date 2/12/27 f | 3,737,000 | 3,832,761 | ||||||
BGC Partners 4.50% exercise price $9.84, expiration date 7/13/16 | 2,653,000 | 2,861,924 | ||||||
Blackstone Mortgage Trust 5.25% exercise price $28.66, expiration date 12/1/18 | 3,219,000 | 3,550,959 | ||||||
Blucora 144A 4.25% exercise price $21.66, expiration | 1,891,000 | 2,100,192 | ||||||
Campus Crest Communities Operating Partnership 144A 4.75% exercise price $12.56, expiration date 10/11/18 # | 1,736,000 | 1,712,130 | ||||||
Chesapeake Energy 2.25% exercise price $85.40, expiration date 12/14/38 | 1,000,000 | 950,000 | ||||||
Ciena 144A 3.75% exercise price $20.17, expiration date 10/15/18 # | 2,701,000 | 3,512,988 | ||||||
Dendreon 2.875% exercise price $51.24, expiration date 1/13/16 * | 3,121,000 | 2,360,256 | ||||||
Energy XXI Bermuda 144A 3.00% exercise price $40.40, expiration date 12/13/18 # | 2,896,000 | 2,863,420 | ||||||
Equinix 4.75% exercise price $84.32, expiration date 6/13/16 * | 883,000 | 2,023,726 |
17
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Convertible Bonds (continued) | ||||||||
General Cable 4.50% exercise price $35.88, expiration date | 1,929,000 | $ | 1,938,645 | |||||
Gilead Sciences 1.625% exercise price $22.71, expiration date 5/1/16 | 1,055,000 | 3,642,393 | ||||||
Hologic 2.00% exercise price $31.17, expiration date 2/27/42 f | 3,514,000 | 3,626,009 | ||||||
Illumina 144A 0.25% exercise price $83.55, expiration date 3/11/16 # | 1,756,000 | 2,986,306 | ||||||
Intel 3.25% exercise price $21.71, expiration date 8/1/39 * | 1,347,000 | 1,897,593 | ||||||
Jefferies Group 3.875% exercise price $45.40, expiration date 10/31/29 | 1,430,000 | 1,522,950 | ||||||
L-3 Communications Holdings 3.00% exercise price $89.08, expiration date 8/1/35 | 1,250,000 | 1,633,594 | ||||||
Lexington Realty Trust 144A 6.00% exercise price $6.76, expiration date 1/11/30 # | 1,580,000 | 2,522,075 | ||||||
Liberty Interactive 0.75% exercise price $1,000.00, expiration date 3/30/43 | 3,140,000 | 4,078,075 | ||||||
Liberty Interactive 144A 1.00% exercise price $74.31, expiration date 9/28/43 # | 2,829,000 | 2,973,986 | ||||||
MGM Resorts International 4.25% exercise price $18.58, expiration date 4/10/15 | 1,493,000 | 2,134,057 | ||||||
Mylan 3.75% exercise price $13.32, expiration date 9/15/15 | 895,000 | 3,420,578 | ||||||
Novellus Systems 2.625% exercise price $35.11, expiration date 5/14/41 | 1,741,000 | 3,096,804 | ||||||
NuVasive 2.75% exercise price $42.13, expiration date 6/30/17 | 3,263,000 | 3,683,111 | ||||||
Peabody Energy 4.75% exercise price $57.62, expiration date 12/15/41 * | 7,059,000 | 5,625,141 | ||||||
SanDisk 1.50% exercise price $51.83, expiration date 8/11/17 | 1,609,000 | 2,747,367 | ||||||
SBA Communications 4.00% exercise price $30.38, expiration date 9/29/14 | 751,000 | 2,212,634 | ||||||
Titan Machinery 3.75% exercise price $43.17, expiration date 4/30/19 | 1,990,000 | 1,749,956 | ||||||
Vantage Drilling 144A 5.50% exercise price $2.39, expiration date 7/15/43 # | 989,000 | 1,043,395 | ||||||
Vector Group 2.50% exercise price $17.62, expiration date 1/14/19 — | 2,008,000 | 2,716,358 | ||||||
VeriSign 3.25% exercise price $34.37, expiration date 8/15/37 | 1,078,000 | 1,595,440 | ||||||
|
| |||||||
Total Convertible Bonds (cost $81,282,987) | 90,985,681 | |||||||
|
|
18
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds – 56.91% | ||||||||||||
Automotive – 0.60% | ||||||||||||
American Axle & Manufacturing | ||||||||||||
6.25% 3/15/21 | 4,810,000 | $ | 5,110,625 | |||||||||
7.75% 11/15/19 | 162,000 | 186,705 | ||||||||||
Chassix 144A 9.25% 8/1/18 # | 825,000 | 898,219 | ||||||||||
Daimler 2.75% 12/10/18 | NOK | 13,910,000 | 2,343,913 | |||||||||
Delphi 4.15% 3/15/24 | 4,160,000 | 4,265,181 | ||||||||||
Ford Motor 7.45% 7/16/31 | 9,269,000 | 12,127,383 | ||||||||||
International Automotive Components Group 144A 9.125% | 89,000 | 95,230 | ||||||||||
Meritor 6.75% 6/15/21 | 2,195,000 | 2,332,187 | ||||||||||
Toyota Finance Australia 3.04% 12/20/16 | NZD | 2,810,000 | 2,317,835 | |||||||||
TRW Automotive 144A 4.50% 3/1/21 # | 4,570,000 | 4,764,225 | ||||||||||
|
| |||||||||||
34,441,503 | ||||||||||||
|
| |||||||||||
Banking – 7.63% | ||||||||||||
Australia & New Zealand Banking Group | ||||||||||||
2.625% 12/10/18 | CAD | 3,366,000 | 3,084,028 | |||||||||
3.564% 11/6/18 — | AUD | 2,939,000 | 2,743,410 | |||||||||
Banco de Costa Rica 144A 5.25% 8/12/18 # | 7,300,000 | 7,336,500 | ||||||||||
Banco Nacional de Costa Rica 144A 4.875% 11/1/18 # | 4,305,000 | 4,283,475 | ||||||||||
Banco Santander Mexico | ||||||||||||
144A 4.125% 11/9/22 # | 2,140,000 | 2,134,650 | ||||||||||
144A 5.95% 1/30/24 #*— | 5,630,000 | 5,862,237 | ||||||||||
BanColombia 5.95% 6/3/21 * | 4,087,000 | 4,444,613 | ||||||||||
Bank Nederlandse Gemeenten 144A 2.625% 4/28/21 # | 10,332,000 | 10,309,559 | ||||||||||
Bank of America | ||||||||||||
2.00% 1/11/18 | 2,855,000 | 2,862,483 | ||||||||||
4.00% 4/1/24 | 19,455,000 | 19,592,761 | ||||||||||
Bank of Georgia 144A 7.75% 7/5/17 # | 5,055,000 | 5,383,575 | ||||||||||
Barclays Bank 7.625% 11/21/22 * | 9,770,000 | 11,119,481 | ||||||||||
BB&T | ||||||||||||
3.95% 3/22/22 | 250,000 | 259,472 | ||||||||||
5.25% 11/1/19 | 13,969,000 | 15,831,543 | ||||||||||
BBVA Bancomer | ||||||||||||
144A 4.375% 4/10/24 # | 3,025,000 | 3,013,656 | ||||||||||
144A 6.50% 3/10/21 # | 7,925,000 | 8,757,125 | ||||||||||
Branch Banking & Trust | ||||||||||||
0.553% 9/13/16 — | 5,010,000 | 4,994,649 | ||||||||||
2.85% 4/1/21 | 3,585,000 | 3,589,496 | ||||||||||
City National 5.25% 9/15/20 * | 5,640,000 | 6,324,369 | ||||||||||
Cooperatieve Centrale Raiffeisen-Boerenleenbank | ||||||||||||
3.655% 3/22/17 — | AUD | 2,000,000 | 1,874,464 | |||||||||
4.00% 1/11/22 | EUR | 1,229,000 | 1,953,749 |
19
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Banking (continued) | ||||||||||||
Credit Suisse 144A 6.50% 8/8/23 # | 9,325,000 | $ | 10,432,717 | |||||||||
Credit Suisse Group 144A 7.50% 12/11/49 #— | 4,720,000 | 5,133,047 | ||||||||||
Fifth Third Bancorp 4.30% 1/16/24 | 5,345,000 | 5,504,783 | ||||||||||
Goldman Sachs Group | ||||||||||||
3.55% 2/12/21 @ | CAD | 3,000,000 | 2,749,838 | |||||||||
3.925% 8/21/19 — | AUD | 2,390,000 | 2,224,952 | |||||||||
4.00% 3/3/24 | 5,265,000 | 5,293,415 | ||||||||||
4.335% 8/8/18 — | AUD | 2,570,000 | 2,437,357 | |||||||||
HBOS 144A 6.75% 5/21/18 # | 6,840,000 | 7,804,187 | ||||||||||
HSBC Holdings 4.25% 3/14/24 | 6,465,000 | 6,546,504 | ||||||||||
HSBC New Zealand 3.89% 12/10/18 — | NZD | 3,300,000 | 2,873,484 | |||||||||
ING Bank 144A 5.80% 9/25/23 # | 11,170,000 | 12,268,972 | ||||||||||
JPMorgan Chase | ||||||||||||
0.858% 1/28/19 — | 2,985,000 | 2,995,489 | ||||||||||
3.665% 5/17/18 — | AUD | 2,730,000 | 2,551,716 | |||||||||
3.875% 2/1/24 * | 7,020,000 | 7,135,058 | ||||||||||
4.25% 11/2/18 | NZD | 7,250,000 | 6,023,984 | |||||||||
6.75% 8/29/49 — | 9,900,000 | 10,543,500 | ||||||||||
KeyBank 6.95% 2/1/28 | 17,740,000 | 21,902,620 | ||||||||||
Lloyds Banking Group 7.50% 4/30/49 *— | 9,275,000 | 9,715,563 | ||||||||||
Morgan Stanley | ||||||||||||
1.079% 1/24/19 — | 3,119,000 | 3,134,190 | ||||||||||
2.50% 1/24/19 | 500,000 | 500,973 | ||||||||||
3.875% 4/29/24 | 815,000 | 811,806 | ||||||||||
5.00% 11/24/25 | 12,890,000 | 13,403,190 | ||||||||||
7.375% 2/22/18 * | AUD | 2,734,000 | 2,782,808 | |||||||||
7.60% 8/8/17 | NZD | 4,780,000 | 4,389,029 | |||||||||
National City Bank 0.604% 6/7/17 — | 9,875,000 | 9,798,972 | ||||||||||
Northern Trust 3.95% 10/30/25 | 4,480,000 | 4,553,454 | ||||||||||
Oversea-Chinese Banking 144A 4.00% 10/15/24 #— | 8,540,000 | 8,513,970 | ||||||||||
PNC Financial Services Group 3.90% 4/29/24 | 6,695,000 | 6,720,977 | ||||||||||
PNC Preferred Funding Trust II 144A 1.456% 3/31/49 #— | 13,900,000 | 13,517,750 | ||||||||||
Rabobank 4.625% 12/1/23 | 8,865,000 | 9,256,798 | ||||||||||
RBS Capital Trust I 2.099% 12/29/49 — | 3,925,000 | 3,846,500 | ||||||||||
Santander Holdings USA 3.45% 8/27/18 | 5,675,000 | 5,932,793 | ||||||||||
Santander UK 144A 5.00% 11/7/23 # | 11,440,000 | 12,102,708 | ||||||||||
Siam Commercial Bank 144A 3.50% 4/7/19 #* | 4,560,000 | 4,595,805 | ||||||||||
SVB Financial Group 5.375% 9/15/20 * | 5,120,000 | 5,784,223 | ||||||||||
Turkiye Garanti Bankasi 144A 4.75% 10/17/19 # | 6,288,000 | 6,303,720 | ||||||||||
Turkiye Is Bankasi 144A 7.85% 12/10/23 # | 3,865,000 | 4,129,907 | ||||||||||
US Bank North America 4.95% 10/30/14 | 4,535,000 | 4,636,611 | ||||||||||
USB Capital IX 3.50% 10/29/49 — | 27,182,000 | 23,240,610 |
20
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Banking (continued) | ||||||||||||
USB Realty 144A 1.475% 12/22/49 #— | 4,485,000 | $ | 4,171,050 | |||||||||
Wells Fargo | ||||||||||||
3.00% 1/22/21 | 5,000,000 | 5,060,930 | ||||||||||
3.50% 9/12/29 | GBP | 1,700,000 | 2,719,355 | |||||||||
5.90% 12/29/49 — | 3,780,000 | 3,888,856 | ||||||||||
Woori Bank 144A 4.75% 4/30/24 # | 4,140,000 | 4,134,788 | ||||||||||
Zions Bancorp | ||||||||||||
4.50% 3/27/17 | 6,835,000 | 7,297,470 | ||||||||||
4.50% 6/13/23 | 6,790,000 | 6,828,703 | ||||||||||
7.75% 9/23/14 | 3,760,000 | 3,854,462 | ||||||||||
|
| |||||||||||
435,804,889 | ||||||||||||
|
| |||||||||||
Basic Industry – 4.58% | ||||||||||||
AK Steel 7.625% 5/15/20 * | 3,259,000 | 3,283,443 | ||||||||||
Alfa 144A 6.875% 3/25/44 # | 805,000 | 832,169 | ||||||||||
ArcelorMittal | ||||||||||||
6.125% 6/1/18 | 3,732,000 | 4,105,200 | ||||||||||
10.35% 6/1/19 | 12,195,000 | 15,457,163 | ||||||||||
Barrick North America Finance 5.75% 5/1/43 | 7,335,000 | 7,454,018 | ||||||||||
Braskem Finance 6.45% 2/3/24 * | 5,900,000 | 6,150,750 | ||||||||||
Cemex Finance 144A 6.00% 4/1/24 # | 3,280,000 | 3,292,300 | ||||||||||
CF Industries | ||||||||||||
5.15% 3/15/34 | 4,020,000 | 4,221,981 | ||||||||||
6.875% 5/1/18 | 18,254,000 | 21,491,511 | ||||||||||
7.125% 5/1/20 | 2,841,000 | 3,427,894 | ||||||||||
Cia Minera Ares 144A 7.75% 1/23/21 #* | 4,030,000 | 4,226,463 | ||||||||||
Dow Chemical 8.55% 5/15/19 | 33,026,000 | 42,382,563 | ||||||||||
First Quantum Minerals | ||||||||||||
144A 6.75% 2/15/20 # | 47,000 | 47,705 | ||||||||||
144A 7.00% 2/15/21 # | 47,000 | 47,881 | ||||||||||
FMG Resources August 2006 144A 6.875% 4/1/22 #* | 19,258,000 | 20,678,277 | ||||||||||
Georgia-Pacific 8.00% 1/15/24 | 16,271,000 | 21,685,680 | ||||||||||
HD Supply | ||||||||||||
7.50% 7/15/20 | 2,684,000 | 2,918,850 | ||||||||||
11.50% 7/15/20 | 1,765,000 | 2,100,350 | ||||||||||
Immucor 11.125% 8/15/19 | 3,332,000 | 3,781,820 | ||||||||||
International Paper | ||||||||||||
6.00% 11/15/41 | 800,000 | 941,009 | ||||||||||
7.50% 8/15/21 | 6,995,000 | 8,833,531 | ||||||||||
JMC Steel Group 144A 8.25% 3/15/18 # | 97,000 | 98,455 | ||||||||||
LSB Industries 144A 7.75% 8/1/19 # | 725,000 | 779,375 | ||||||||||
Masonite International 144A 8.25% 4/15/21 # | 103,000 | 113,815 | ||||||||||
MMC Finance 144A 5.55% 10/28/20 # | 3,903,000 | 3,785,910 |
21
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Basic Industry (continued) | ||||||||
Mosaic 5.625% 11/15/43 | 1,620,000 | $ | 1,795,302 | |||||
New Gold 144A 6.25% 11/15/22 # | 232,000 | 238,960 | ||||||
Nortek 8.50% 4/15/21 | 5,564,000 | 6,162,130 | ||||||
Novelis 8.75% 12/15/20 | 5,145,000 | 5,762,400 | ||||||
OCP | ||||||||
144A 5.625% 4/25/24 #* | 2,950,000 | 2,957,375 | ||||||
144A 6.875% 4/25/44 #* | 3,940,000 | 3,969,944 | ||||||
Perstorp Holding 144A 8.75% 5/15/17 # | 2,825,000 | 3,036,875 | ||||||
Phosagro 144A 4.204% 2/13/18 # | 7,978,000 | 7,519,265 | ||||||
PolyOne 5.25% 3/15/23 | 3,470,000 | 3,522,050 | ||||||
Potash 3.625% 3/15/24 | 5,265,000 | 5,287,487 | ||||||
Rio Tinto Finance USA 3.50% 11/2/20 | 250,000 | 258,733 | ||||||
Rock-Tenn | ||||||||
3.50% 3/1/20 | 5,006,000 | 5,137,132 | ||||||
4.00% 3/1/23 | 3,950,000 | 4,023,905 | ||||||
4.45% 3/1/19 | 2,044,000 | 2,201,233 | ||||||
Ryerson | ||||||||
9.00% 10/15/17 | 3,784,000 | 4,072,530 | ||||||
11.25% 10/15/18 | 1,584,000 | 1,785,960 | ||||||
Samarco Mineracao 144A 5.75% 10/24/23 # | 6,940,000 | 7,061,450 | ||||||
TPC Group 144A 8.75% 12/15/20 # | 2,852,000 | 3,158,590 | ||||||
US Coatings Acquisition 144A 7.375% 5/1/21 #* | 4,585,000 | 5,054,963 | ||||||
Vedanta Resources 144A 6.00% 1/31/19 #* | 6,540,000 | 6,548,175 | ||||||
|
| |||||||
261,692,572 | ||||||||
|
| |||||||
Brokerage – 0.57% | ||||||||
Jefferies Group | ||||||||
5.125% 1/20/23 | 6,470,000 | 6,842,950 | ||||||
6.45% 6/8/27 | 3,795,000 | 4,096,592 | ||||||
6.50% 1/20/43 | 2,445,000 | 2,630,267 | ||||||
Lazard Group | ||||||||
4.25% 11/14/20 | 1,255,000 | 1,306,081 | ||||||
6.85% 6/15/17 | 15,689,000 | 17,830,815 | ||||||
|
| |||||||
32,706,705 | ||||||||
|
| |||||||
Capital Goods – 2.15% | ||||||||
Accudyne Industries 144A 7.75% 12/15/20 # | 1,370,000 | 1,493,300 | ||||||
Ball | ||||||||
4.00% 11/15/23 | 5,865,000 | 5,469,113 | ||||||
5.00% 3/15/22 | 2,715,000 | 2,789,663 | ||||||
BOE Merger 144A PIK 9.50% 11/1/17 #T | 290,000 | 305,950 | ||||||
Cemex | ||||||||
144A 4.976% 10/15/18 #— | 3,645,000 | 3,845,475 | ||||||
144A 9.50% 6/15/18 #* | 2,845,000 | 3,264,637 |
22
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Capital Goods (continued) | ||||||||||||
Consolidated Container 144A 10.125% 7/15/20 # | 3,016,000 | $ | 3,151,720 | |||||||||
Crane | ||||||||||||
2.75% 12/15/18 | 1,655,000 | 1,679,709 | ||||||||||
4.45% 12/15/23 | 7,570,000 | 7,850,151 | ||||||||||
Crown Americas 4.50% 1/15/23 | 2,075,000 | 1,992,000 | ||||||||||
ENA Norte Trust 144A 4.95% 4/25/23 # | 4,357,622 | 4,224,061 | ||||||||||
General Electric 4.50% 3/11/44 | 4,270,000 | 4,415,774 | ||||||||||
Ingersoll-Rand Global Holding 144A 4.25% 6/15/23 # | 12,015,000 | 12,359,806 | ||||||||||
Metalloinvest Finance | ||||||||||||
144A 5.625% 4/17/20 # | 6,355,000 | 5,703,613 | ||||||||||
144A 6.50% 7/21/16 # | 1,005,000 | 1,002,487 | ||||||||||
Milacron 144A 7.75% 2/15/21 # | 3,335,000 | 3,668,500 | ||||||||||
OAS Investments 144A 8.25% 10/19/19 # | 5,530,000 | 5,675,163 | ||||||||||
Odebrecht Offshore Drilling Finance | ||||||||||||
144A 6.625% 10/1/22 #* | 6,270,000 | 6,583,500 | ||||||||||
144A 6.75% 10/1/22 # | 1,833,917 | 1,923,320 | ||||||||||
Plastipak Holdings 144A 6.50% 10/1/21 # | 3,655,000 | 3,819,475 | ||||||||||
Reynolds Group Issuer | ||||||||||||
8.25% 2/15/21 * | 2,755,000 | 2,992,619 | ||||||||||
9.00% 4/15/19 | 9,720,000 | 10,424,700 | ||||||||||
Sealed Air 144A 6.50% 12/1/20 # | 4,615,000 | 5,122,650 | ||||||||||
TransDigm 7.50% 7/15/21 | 3,825,000 | 4,226,625 | ||||||||||
URS 5.00% 4/1/22 * | 5,745,000 | 5,813,256 | ||||||||||
Votorantim Cimentos 144A 7.25% 4/5/41 # | 12,650,000 | 13,013,688 | ||||||||||
|
| |||||||||||
122,810,955 | ||||||||||||
|
| |||||||||||
Communications – 9.13% | ||||||||||||
Altice 144A 7.75% 5/15/22 # | 1,825,000 | 1,904,844 | ||||||||||
America Movil 5.00% 3/30/20 | 10,870,000 | 12,135,203 | ||||||||||
American Tower 5.00% 2/15/24 | 3,260,000 | 3,474,518 | ||||||||||
American Tower Trust I | ||||||||||||
144A 1.551% 3/15/43 # | 4,230,000 | 4,151,049 | ||||||||||
144A 3.07% 3/15/23 # | 10,175,000 | 9,842,547 | ||||||||||
AT&T 3.90% 3/11/24 | 14,285,000 | 14,479,890 | ||||||||||
Bell Canada 3.35% 3/22/23 | CAD | 4,236,000 | 3,776,973 | |||||||||
Brasil Telecom 144A 5.75% 2/10/22 # | 5,318,000 | 5,264,820 | ||||||||||
CC Holdings GS V 3.849% 4/15/23 | 5,355,000 | 5,265,839 | ||||||||||
CCO Holdings 5.25% 9/30/22 | 4,068,000 | 4,083,255 | ||||||||||
CenturyLink | ||||||||||||
5.80% 3/15/22 | 12,355,000 | 12,725,650 | ||||||||||
6.75% 12/1/23 | 3,120,000 | 3,361,800 | ||||||||||
Cequel Communications Holdings I 144A | ||||||||||||
6.375% 9/15/20 # | 3,942,000 | 4,148,955 |
23
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Communications (continued) | ||||||||||||
Cisco Systems | ||||||||||||
2.90% 3/4/21 | 2,820,000 | $ | 2,844,495 | |||||||||
3.625% 3/4/24 | 8,695,000 | 8,855,031 | ||||||||||
Columbus International 144A 7.375% 3/30/21 #* | 7,680,000 | 8,054,400 | ||||||||||
Comcast 4.75% 3/1/44 | 5,865,000 | 6,137,963 | ||||||||||
Comcel Trust 144A 6.875% 2/6/24 # | 3,400,000 | 3,565,750 | ||||||||||
Crown Castle Towers 144A 4.883% 8/15/20 # | 30,105,000 | 33,425,852 | ||||||||||
CSC Holdings 6.75% 11/15/21 | 3,205,000 | 3,585,594 | ||||||||||
Deutsche Telekom International Finance 6.50% 4/8/22 | GBP | 1,270,000 | 2,578,366 | |||||||||
Digicel 144A 8.25% 9/1/17 # | 2,227,000 | 2,321,759 | ||||||||||
Digicel Group 144A 8.25% 9/30/20 # | 10,574,000 | 11,314,180 | ||||||||||
DIRECTV Holdings 4.45% 4/1/24 | 5,480,000 | 5,570,771 | ||||||||||
DISH DBS | ||||||||||||
5.00% 3/15/23 | 4,195,000 | 4,289,387 | ||||||||||
5.875% 7/15/22 | 1,499,000 | 1,620,794 | ||||||||||
7.875% 9/1/19 | 1,998,000 | 2,375,123 | ||||||||||
Entel Chile 144A 4.875% 10/30/24 # | 3,890,000 | 4,090,833 | ||||||||||
Equinix | ||||||||||||
4.875% 4/1/20 | 2,245,000 | 2,301,125 | ||||||||||
5.375% 4/1/23 | 3,545,000 | 3,624,763 | ||||||||||
Gray Television 7.50% 10/1/20 * | 4,390,000 | 4,741,200 | ||||||||||
Hughes Satellite Systems 7.625% 6/15/21 | 2,255,000 | 2,553,787 | ||||||||||
Intelsat Jackson Holdings 144A 5.50% 8/1/23 # | 4,270,000 | 4,195,275 | ||||||||||
Intelsat Luxembourg | ||||||||||||
7.75% 6/1/21 | 4,665,000 | 4,880,756 | ||||||||||
8.125% 6/1/23 | 4,120,000 | 4,341,450 | ||||||||||
Interpublic Group 4.20% 4/15/24 * | 6,535,000 | 6,655,747 | ||||||||||
Lamar Media 5.00% 5/1/23 | 4,975,000 | 5,024,750 | ||||||||||
Level 3 Financing | ||||||||||||
144A 6.125% 1/15/21 # | 1,785,000 | 1,878,713 | ||||||||||
7.00% 6/1/20 | 2,677,000 | 2,904,545 | ||||||||||
MDC Partners 144A 6.75% 4/1/20 # | 3,290,000 | 3,495,625 | ||||||||||
MetroPCS Wireless 6.625% 11/15/20 | 2,848,000 | 3,050,920 | ||||||||||
Millicom International Cellular 144A 6.625% 10/15/21 # | 4,645,000 | 4,865,637 | ||||||||||
MTS International Funding 144A 8.625% 6/22/20 # | 5,595,000 | 6,364,313 | ||||||||||
Myriad International Holdings | ||||||||||||
144A 6.00% 7/18/20 # | 1,905,000 | 2,090,737 | ||||||||||
144A 6.375% 7/28/17 # | 4,615,000 | 5,139,956 | ||||||||||
Netflix 144A 5.75% 3/1/24 # | 4,400,000 | 4,576,000 | ||||||||||
Nielsen Luxembourg 144A 5.50% 10/1/21 # | 2,040,000 | 2,136,900 | ||||||||||
Numericable Group 144A 6.00% 5/15/22 # | 1,955,000 | 2,003,875 | ||||||||||
Rogers Communications 5.00% 3/15/44 | 4,305,000 | 4,422,759 |
24
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Communications (continued) | ||||||||||||
SBA Tower Trust 144A 2.24% 4/16/18 # | 7,245,000 | $ | 7,143,617 | |||||||||
SES 144A 3.60% 4/4/23 # | 12,999,000 | 12,711,007 | ||||||||||
SES Global Americas Holdings | ||||||||||||
144A 2.50% 3/25/19 # | 930,000 | 931,878 | ||||||||||
144A 5.30% 3/25/44 # | 9,920,000 | 10,338,088 | ||||||||||
Sinclair Television Group | ||||||||||||
5.375% 4/1/21 | 4,900,000 | 4,900,000 | ||||||||||
6.125% 10/1/22 | 2,143,000 | 2,199,254 | ||||||||||
Sprint | ||||||||||||
144A 7.125% 6/15/24 # | 5,035,000 | 5,299,338 | ||||||||||
144A 7.25% 9/15/21 # | 4,075,000 | 4,457,031 | ||||||||||
144A 7.875% 9/15/23 # | 1,010,000 | 1,116,050 | ||||||||||
Sprint Capital 6.90% 5/1/19 | 4,335,000 | 4,779,338 | ||||||||||
TBG Global 144A 4.625% 4/3/18 # | 5,285,000 | 5,212,331 | ||||||||||
Telefonica Chile 144A 3.875% 10/12/22 #* | 10,930,000 | 10,630,267 | ||||||||||
Telefonica Emisiones | ||||||||||||
4.57% 4/27/23 | 5,134,000 | 5,389,334 | ||||||||||
5.134% 4/27/20 | 5,510,000 | 6,107,504 | ||||||||||
5.289% 12/9/22 | GBP | 2,050,000 | 3,778,065 | |||||||||
Telemar Norte Leste 144A 5.50% 10/23/20 # | 10,030,000 | 10,218,063 | ||||||||||
Tencent Holdings 144A 3.375% 5/2/19 # | 4,640,000 | 4,670,030 | ||||||||||
Time Warner 4.70% 1/15/21 | 250,000 | 274,595 | ||||||||||
Time Warner Cable | ||||||||||||
5.85% 5/1/17 | 2,037,000 | 2,309,221 | ||||||||||
8.25% 4/1/19 | 11,941,000 | 15,138,895 | ||||||||||
T-Mobile USA | ||||||||||||
6.125% 1/15/22 | 1,340,000 | 1,413,700 | ||||||||||
6.836% 4/28/23 * | 7,245,000 | 7,824,600 | ||||||||||
Univision Communications | ||||||||||||
144A 5.125% 5/15/23 # | 6,985,000 | 7,159,625 | ||||||||||
144A 6.75% 9/15/22 # | 1,425,000 | 1,574,625 | ||||||||||
UPCB Finance III 144A 6.625% 7/1/20 # | 8,039,000 | 8,621,828 | ||||||||||
Verizon Communications | ||||||||||||
3.25% 2/17/26 | EUR | 2,606,000 | 3,813,592 | |||||||||
4.15% 3/15/24 | 2,410,000 | 2,474,207 | ||||||||||
5.15% 9/15/23 | 25,520,000 | 28,184,441 | ||||||||||
6.40% 9/15/33 | 3,825,000 | 4,625,817 | ||||||||||
Viacom 5.25% 4/1/44 * | 4,125,000 | 4,331,225 | ||||||||||
Vimpel Communications 144A 7.748% 2/2/21 # | 9,019,000 | 9,131,738 | ||||||||||
Virgin Media Finance 144A 6.375% 4/15/23 # | 3,270,000 | 3,449,850 | ||||||||||
Virgin Media Secured Finance 6.50% 1/15/18 | 34,343,000 | 35,567,328 | ||||||||||
VTR Finance 144A 6.875% 1/15/24 # | 5,110,000 | 5,337,860 |
25
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Communications (continued) | ||||||||
Wind Acquisition Finance | ||||||||
144A 7.25% 2/15/18 # | 1,335,000 | $ | 1,411,763 | |||||
144A 7.375% 4/23/21 # | 3,265,000 | 3,362,950 | ||||||
Windstream | ||||||||
7.50% 6/1/22 * | 49,000 | 52,553 | ||||||
7.50% 4/1/23 | 1,375,000 | 1,457,500 | ||||||
7.75% 10/1/21 | 2,300,000 | 2,501,250 | ||||||
Zayo Group 10.125% 7/1/20 | 4,770,000 | 5,539,163 | ||||||
|
| |||||||
521,933,995 | ||||||||
|
| |||||||
Consumer Cyclical – 2.82% | ||||||||
Caesars Growth Properties Holdings 144A | ||||||||
9.375% 5/1/22 #* | 2,350,000 | 2,348,531 | ||||||
Chinos Intermediate Holdings 144A PIK 7.75% 5/1/19 #T | 3,445,000 | 3,574,187 | ||||||
CVS Caremark 4.00% 12/5/23 | 10,690,000 | 11,092,917 | ||||||
Dave & Buster’s Entertainment 144A 0.00% 2/15/16 #^ | 119,000 | 101,150 | ||||||
DBP Holding 144A 7.75% 10/15/20 # | 112,000 | 101,780 | ||||||
Delphi 6.125% 5/15/21 | 6,275,000 | 7,004,469 | ||||||
General Motors 144A 3.50% 10/2/18 # | 6,545,000 | 6,700,444 | ||||||
Historic TW 6.875% 6/15/18 | 24,569,000 | 29,223,916 | ||||||
Host Hotels & Resorts | ||||||||
3.75% 10/15/23 | 8,280,000 | 8,155,030 | ||||||
4.75% 3/1/23 | 9,710,000 | 10,282,647 | ||||||
5.875% 6/15/19 | 3,045,000 | 3,298,600 | ||||||
International Game Technology 5.35% 10/15/23 | 12,384,000 | 13,311,896 | ||||||
Landry’s 144A 9.375% 5/1/20 # | 1,579,000 | 1,748,743 | ||||||
Levi Strauss 6.875% 5/1/22 | 5,510,000 | 6,122,987 | ||||||
Marriott International 3.375% 10/15/20 | 5,735,000 | 5,805,363 | ||||||
Pantry 8.375% 8/1/20 | 94,000 | 101,990 | ||||||
Party City Holdings 8.875% 8/1/20 | 99,000 | 110,880 | ||||||
PF Chang’s China Bistro 144A 10.25% 6/30/20 # | 1,281,000 | 1,338,645 | ||||||
QVC 4.375% 3/15/23 | 13,770,000 | 13,691,676 | ||||||
Rite Aid 9.25% 3/15/20 | 4,097,000 | 4,680,823 | ||||||
Sally Holdings 5.75% 6/1/22 | 4,201,000 | 4,484,567 | ||||||
Tempur-Pedic International 6.875% 12/15/20 | 60,000 | 65,700 | ||||||
Tenedora Nemak 144A 5.50% 2/28/23 # | 7,440,000 | 7,551,600 | ||||||
TRW Automotive 144A 4.45% 12/1/23 # | 8,140,000 | 8,323,150 | ||||||
Wyndham Worldwide | ||||||||
4.25% 3/1/22 | 4,480,000 | 4,560,510 | ||||||
5.625% 3/1/21 | 6,270,000 | 6,883,400 | ||||||
Yum Brands 3.875% 11/1/23 * | 300,000 | 303,318 | ||||||
|
| |||||||
160,968,919 | ||||||||
|
|
26
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Consumer Non-Cyclical – 3.74% | ||||||||
BFF International 144A 7.25% 1/28/20 # | 4,025,000 | $ | 4,648,875 | |||||
Boston Scientific | ||||||||
2.65% 10/1/18 | 4,795,000 | 4,869,788 | ||||||
6.00% 1/15/20 | 12,030,000 | 13,956,436 | ||||||
BRF 144A 5.875% 6/6/22 # | 8,925,000 | 9,527,437 | ||||||
CareFusion 6.375% 8/1/19 | 33,210,000 | 38,507,360 | ||||||
Celgene 3.95% 10/15/20 | 10,810,000 | 11,403,901 | ||||||
Coca-Cola Femsa 2.375% 11/26/18 | 1,156,000 | 1,164,578 | ||||||
Coca-Cola Icecek 144A 4.75% 10/1/18 # | 5,895,000 | 6,209,852 | ||||||
Constellation Brands 6.00% 5/1/22 | 5,215,000 | 5,814,725 | ||||||
Cosan Luxembourg 144A 5.00% 3/14/23 # | 6,735,000 | 6,415,087 | ||||||
Fomento Economico Mexicano 4.375% 5/10/43 | 4,120,000 | 3,719,046 | ||||||
Gilead Sciences 3.70% 4/1/24 | 9,435,000 | 9,593,838 | ||||||
Jarden 6.125% 11/15/22 | 2,095,000 | 2,252,125 | ||||||
JBS Investments 144A 7.75% 10/28/20 # | 10,215,000 | 10,917,281 | ||||||
Kimberly-Clark de Mexico 144A 3.80% 4/8/24 # | 2,035,000 | 2,060,437 | ||||||
Korea Expressway 144A 1.875% 10/22/17 # | 9,585,000 | 9,601,496 | ||||||
Marfrig Overseas 144A 9.50% 5/4/20 # | 3,850,000 | 3,955,875 | ||||||
McKesson 3.796% 3/15/24 | 11,915,000 | 12,071,515 | ||||||
Pernod-Ricard 144A 5.75% 4/7/21 # | 5,710,000 | 6,526,479 | ||||||
Prestige Brands 144A 5.375% 12/15/21 # | 4,170,000 | 4,295,100 | ||||||
Quest Diagnostics 2.70% 4/1/19 | 3,530,000 | 3,548,402 | ||||||
Scotts Miracle-Gro 6.625% 12/15/20 * | 3,438,000 | 3,738,825 | ||||||
Smithfield Foods 6.625% 8/15/22 | 4,100,000 | 4,494,625 | ||||||
Spectrum Brands Escrow | ||||||||
6.375% 11/15/20 | 4,575,000 | 4,986,750 | ||||||
6.625% 11/15/22 | 68,000 | 74,630 | ||||||
Thermo Fisher Scientific 2.40% 2/1/19 | 7,047,000 | 7,123,946 | ||||||
Want Want China Finance 144A 1.875% 5/14/18 # | 5,350,000 | 5,186,012 | ||||||
Zimmer Holdings 4.625% 11/30/19 | 15,546,000 | 17,274,156 | ||||||
|
| |||||||
213,938,577 | ||||||||
|
| |||||||
Electric – 5.37% | ||||||||
AES Gener 144A 8.375% 12/18/73 #*— | 4,962,000 | 5,358,960 | ||||||
Ameren Illinois 9.75% 11/15/18 | 16,130,000 | 21,102,089 | ||||||
American Transmission Systems 144A 5.25% 1/15/22 # | 19,960,000 | 21,703,746 | ||||||
CMS Energy 6.25% 2/1/20 | 7,690,000 | 9,084,589 | ||||||
ComEd Financing III 6.35% 3/15/33 | 8,849,000 | 8,760,510 | ||||||
Comision Federal de Electricidad 144A 4.875% 1/15/24 # | 4,575,000 | 4,706,531 | ||||||
Duquesne Light Holdings 5.50% 8/15/15 * | 3,168,000 | 3,336,281 | ||||||
Electricite de France | ||||||||
144A 4.60% 1/27/20 # | 3,580,000 | 3,947,469 |
27
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Electric (continued) | ||||||||
Electricite de France | ||||||||
144A 4.875% 1/22/44 # | 1,985,000 | $ | 2,054,552 | |||||
144A 5.25% 12/29/49 #— | 15,720,000 | 16,081,560 | ||||||
Enel 144A 8.75% 9/24/73 #— | 6,930,000 | 8,004,150 | ||||||
Entergy Louisiana 4.05% 9/1/23 | 13,930,000 | 14,793,367 | ||||||
Exelon Generation 4.25% 6/15/22 | 11,570,000 | 11,870,959 | ||||||
Great Plains Energy | ||||||||
4.85% 6/1/21 | 4,595,000 | 4,988,723 | ||||||
5.292% 6/15/22 | 7,315,000 | 8,231,928 | ||||||
Integrys Energy Group 6.11% 12/1/66 *— | 13,885,000 | 13,945,261 | ||||||
IPALCO Enterprises 5.00% 5/1/18 | 5,745,000 | 6,147,150 | ||||||
LG&E & KU Energy | ||||||||
3.75% 11/15/20 | 9,197,000 | 9,489,704 | ||||||
4.375% 10/1/21 | 15,250,000 | 16,192,481 | ||||||
National Rural Utilities Cooperative Finance | ||||||||
4.75% 4/30/43 — | 10,405,000 | 9,884,750 | ||||||
NextEra Energy Capital Holdings | ||||||||
3.625% 6/15/23 | 4,570,000 | 4,456,202 | ||||||
6.35% 10/1/66 *— | 8,346,000 | 8,225,317 | ||||||
NV Energy 6.25% 11/15/20 | 10,843,000 | 12,808,283 | ||||||
Pennsylvania Electric 5.20% 4/1/20 | 9,253,000 | 10,248,900 | ||||||
PPL Capital Funding 6.70% 3/30/67 — | 2,500,000 | 2,526,645 | ||||||
Public Service Company of Oklahoma 5.15% 12/1/19 | 13,585,000 | 15,336,636 | ||||||
Puget Energy 6.00% 9/1/21 | 4,685,000 | 5,484,092 | ||||||
Puget Sound Energy 6.974% 6/1/67 — | 18,119,000 | 18,813,429 | ||||||
SCANA 4.125% 2/1/22 | 9,040,000 | 9,172,662 | ||||||
Wisconsin Energy 6.25% 5/15/67 — | 19,330,000 | 19,996,092 | ||||||
|
| |||||||
306,753,018 | ||||||||
|
| |||||||
Energy – 5.47% | ||||||||
AmeriGas Finance 7.00% 5/20/22 | 2,864,000 | 3,164,720 | ||||||
Bristow Group 6.25% 10/15/22 | 3,735,000 | 4,019,794 | ||||||
Chaparral Energy | ||||||||
7.625% 11/15/22 | 769,000 | 822,830 | ||||||
8.25% 9/1/21 | 78,000 | 85,605 | ||||||
Chesapeake Energy 5.75% 3/15/23 * | 9,740,000 | 10,397,450 | ||||||
CNOOC Finance 2012 144A 3.875% 5/2/22 # | 4,955,000 | 4,905,381 | ||||||
CNOOC Nexen Finance 2014 4.25% 4/30/24 | 7,345,000 | 7,361,144 | ||||||
Continental Resources 4.50% 4/15/23 | 16,805,000 | 17,691,346 | ||||||
Drill Rigs Holdings 144A 6.50% 10/1/17 # | 5,169,000 | 5,362,837 | ||||||
Ecopetrol 7.625% 7/23/19 | 3,607,000 | 4,355,453 | ||||||
Energy XXI Gulf Coast 144A 7.50% 12/15/21 #* | 3,945,000 | 4,191,563 | ||||||
Exterran Partners 6.00% 4/1/21 | 1,270,000 | 1,276,350 |
28
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Energy (continued) | ||||||||
Halcon Resources 8.875% 5/15/21 | 3,976,000 | $ | 4,140,010 | |||||
Hercules Offshore | ||||||||
144A 6.75% 4/1/22 # | 870,000 | 842,813 | ||||||
144A 8.75% 7/15/21 # | 1,270,000 | 1,374,775 | ||||||
Husky Energy 4.00% 4/15/24 | 11,445,000 | 11,821,449 | ||||||
KazMunayGas National 144A 9.125% 7/2/18 # | 8,410,000 | 10,081,487 | ||||||
Key Energy Services 6.75% 3/1/21 | 4,135,000 | 4,383,100 | ||||||
Laredo Petroleum 7.375% 5/1/22 * | 3,602,000 | 3,989,215 | ||||||
Linn Energy | ||||||||
6.50% 5/15/19 | 1,216,000 | 1,267,680 | ||||||
8.625% 4/15/20 | 1,912,000 | 2,072,130 | ||||||
Lukoil International Finance 6.125% 11/9/20 | 4,270,000 | 4,302,025 | ||||||
Midstates Petroleum 9.25% 6/1/21 * | 3,795,000 | 3,899,363 | ||||||
MIE Holdings 144A 7.50% 4/25/19 # | 3,610,000 | 3,641,587 | ||||||
Murphy Oil USA 144A 6.00% 8/15/23 # | 4,130,000 | 4,284,875 | ||||||
Newfield Exploration 5.625% 7/1/24 | 8,180,000 | 8,568,550 | ||||||
Nostrum Oil & Gas Finance 144A 6.375% 2/14/19 # | 3,865,000 | 3,884,325 | ||||||
Oasis Petroleum 144A 6.875% 3/15/22 # | 4,755,000 | 5,182,950 | ||||||
ONGC Videsh 2.50% 5/7/18 * | 8,240,000 | 7,961,488 | ||||||
Pacific Rubiales Energy | ||||||||
144A 5.375% 1/26/19 # | 3,515,000 | 3,620,450 | ||||||
144A 7.25% 12/12/21 # | 6,470,000 | 7,100,825 | ||||||
PDC Energy 7.75% 10/15/22 | 1,273,000 | 1,403,483 | ||||||
Pertamina Persero | ||||||||
144A 4.30% 5/20/23 # | 1,425,000 | 1,302,094 | ||||||
144A 4.875% 5/3/22 # | 5,715,000 | 5,507,831 | ||||||
Petrobras Global Finance | ||||||||
3.00% 1/15/19 | 6,475,000 | 6,286,247 | ||||||
6.25% 3/17/24 | 2,930,000 | 3,085,009 | ||||||
Petrobras International Finance 5.375% 1/27/21 | 6,036,000 | 6,211,762 | ||||||
Petrohawk Energy 7.25% 8/15/18 | 14,758,000 | 15,615,218 | ||||||
Petroleos de Venezuela | ||||||||
8.50% 11/2/17 | 6,500,000 | 5,866,250 | ||||||
9.00% 11/17/21 | 1,500,000 | 1,231,875 | ||||||
Petroleos Mexicanos | ||||||||
144A 6.375% 1/23/45 # | 1,095,000 | 1,201,763 | ||||||
6.50% 6/2/41 | 3,250,000 | 3,623,750 | ||||||
Pride International 6.875% 8/15/20 | 30,565,000 | 36,798,396 | ||||||
Range Resources 5.75% 6/1/21 | 1,800,000 | 1,935,000 | ||||||
Samson Investment 144A 10.75% 2/15/20 # | 5,538,000 | 5,870,280 | ||||||
SandRidge Energy | ||||||||
8.125% 10/15/22 | 13,067,000 | 14,210,363 |
29
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Energy (continued) | ||||||||||||
SandRidge Energy | ||||||||||||
8.75% 1/15/20 * | 30,000 | $ | 32,588 | |||||||||
Suburban Propane Partners 7.375% 8/1/21 | 1,449,000 | 1,601,145 | ||||||||||
Sunoco Logistics Partners Operations 3.45% 1/15/23 | 2,520,000 | 2,436,467 | ||||||||||
Talisman Energy 5.50% 5/15/42 | 21,045,000 | 21,762,908 | ||||||||||
Woodside Finance 144A 8.75% 3/1/19 # | 10,371,000 | 13,186,478 | ||||||||||
YPF 144A 8.75% 4/4/24 #* | 7,312,000 | 7,375,980 | ||||||||||
|
| |||||||||||
312,598,457 | ||||||||||||
|
| |||||||||||
Finance Companies – 1.41% | ||||||||||||
Ford Motor Credit 5.875% 8/2/21 | 205,000 | 237,989 | ||||||||||
General Electric Capital | ||||||||||||
2.10% 12/11/19 | 3,225,000 | 3,215,554 | ||||||||||
144A 3.80% 6/18/19 # | 6,510,000 | 6,912,357 | ||||||||||
4.208% 12/6/21 | SEK | 4,000,000 | 663,441 | |||||||||
4.375% 9/16/20 | 11,420,000 | 12,513,339 | ||||||||||
6.25% 12/15/49 — | 3,135,000 | 3,420,135 | ||||||||||
7.125% 12/15/49 — | 14,810,000 | 17,058,291 | ||||||||||
General Electric Capital Canada Funding 2.42% 5/31/18 | CAD | 980,000 | 903,199 | |||||||||
General Electric Capital European Funding 2.25% 7/20/20 | EUR | 1,254,000 | 1,795,035 | |||||||||
Hyundai Capital America | ||||||||||||
144A 2.125% 10/2/17 # | 6,005,000 | 6,079,444 | ||||||||||
144A 2.55% 2/6/19 # | 255,000 | 255,840 | ||||||||||
IPIC GMTN 144A 5.50% 3/1/22 # | 4,242,000 | 4,798,763 | ||||||||||
Nuveen Investments 144A 9.50% 10/15/20 # | 9,434,000 | 11,297,215 | ||||||||||
Temasek Financial I 144A 2.375% 1/23/23 # | 4,915,000 | 4,575,383 | ||||||||||
Trust F/1401 144A 5.25% 12/15/24 # | 7,040,000 | 7,136,800 | ||||||||||
|
| |||||||||||
80,862,785 | ||||||||||||
|
| |||||||||||
Healthcare – 0.93% | ||||||||||||
Air Medical Group Holdings 9.25% 11/1/18 | 3,393,000 | 3,681,405 | ||||||||||
Alere 7.25% 7/1/18 | 1,158,000 | 1,276,695 | ||||||||||
Biomet 6.50% 10/1/20 | 5,413,000 | 5,927,235 | ||||||||||
Community Health Systems | ||||||||||||
144A 6.875% 2/1/22 # | 1,750,000 | 1,822,187 | ||||||||||
7.125% 7/15/20 | 50,000 | 53,687 | ||||||||||
8.00% 11/15/19 | 2,221,000 | 2,440,324 | ||||||||||
Fresenius Medical Care US Finance II 144A | ||||||||||||
5.875% 1/31/22 # | 4,243,000 | 4,540,010 | ||||||||||
HCA | ||||||||||||
5.00% 3/15/24 | 4,210,000 | 4,188,950 | ||||||||||
7.50% 2/15/22 | 5,344,000 | 6,108,192 | ||||||||||
HCA Holdings | ||||||||||||
6.25% 2/15/21 | 2,813,000 | 2,978,264 |
30
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Healthcare (continued) | ||||||||
HCA Holdings | ||||||||
7.75% 5/15/21 | 124,000 | $ | 136,555 | |||||
Kinetic Concepts 10.50% 11/1/18 | 2,579,000 | 2,959,403 | ||||||
Par Pharmaceutical 7.375% 10/15/20 | 1,776,000 | 1,935,840 | ||||||
Salix Pharmaceuticals 144A 6.00% 1/15/21 # | 4,300,000 | 4,622,500 | ||||||
Tenet Healthcare | ||||||||
144A 6.00% 10/1/20 # | 5,849,000 | 6,152,417 | ||||||
8.00% 8/1/20 | 1,725,000 | 1,880,250 | ||||||
Valeant Pharmaceuticals International | ||||||||
144A 5.625% 12/1/21 # | 925,000 | 964,313 | ||||||
144A 6.375% 10/15/20 # | 1,586,000 | 1,712,880 | ||||||
|
| |||||||
53,381,107 | ||||||||
|
| |||||||
Insurance – 2.41% | ||||||||
Allstate 5.75% 8/15/53 — | 8,435,000 | 9,041,266 | ||||||
American International Group | ||||||||
4.125% 2/15/24 | 4,330,000 | 4,540,291 | ||||||
8.175% 5/15/58 — | 1,778,000 | 2,386,965 | ||||||
8.25% 8/15/18 | 14,270,000 | 17,861,388 | ||||||
Berkshire Hathaway Finance 2.90% 10/15/20 | 3,820,000 | 3,899,953 | ||||||
Chubb 6.375% 3/29/67 — | 12,663,000 | 14,119,245 | ||||||
Five Corners Funding Trust 144A 4.419% 11/15/23 # | 835,000 | 873,760 | ||||||
Highmark | ||||||||
144A 4.75% 5/15/21 # | 5,300,000 | 5,238,350 | ||||||
144A 6.125% 5/15/41 # | 1,995,000 | 1,894,049 | ||||||
Hockey Merger Sub 2 144A 7.875% 10/1/21 # | 3,555,000 | 3,812,737 | ||||||
ING U.S. 5.65% 5/15/53 — | 8,420,000 | 8,461,258 | ||||||
Liberty Mutual Group 144A 4.25% 6/15/23 # | 7,105,000 | 7,308,899 | ||||||
MetLife | ||||||||
3.60% 4/10/24 | 8,665,000 | 8,749,536 | ||||||
6.40% 12/15/36 | 35,000 | 38,150 | ||||||
MetLife Capital Trust X 144A 9.25% 4/8/38 # | 11,520,000 | 15,552,000 | ||||||
Onex USI Acquisition 144A 7.75% 1/15/21 # | 709,000 | 735,587 | ||||||
Prudential Financial | ||||||||
3.875% 1/14/15 | 4,020,000 | 4,118,474 | ||||||
4.50% 11/15/20 | 3,385,000 | 3,710,102 | ||||||
5.625% 6/15/43 — | 4,580,000 | 4,751,750 | ||||||
5.875% 9/15/42 — | 4,095,000 | 4,330,463 | ||||||
6.00% 12/1/17 | 7,285,000 | 8,399,416 | ||||||
XL Group 6.50% 12/29/49 — | 7,814,000 | 7,735,860 | ||||||
|
| |||||||
137,559,499 | ||||||||
|
|
31
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Natural Gas – 3.07% | ||||||||
El Paso Pipeline Partners Operating | ||||||||
4.30% 5/1/24 | 1,335,000 | $ | 1,345,127 | |||||
6.50% 4/1/20 | 12,515,000 | 14,614,792 | ||||||
Enbridge Energy Partners 8.05% 10/1/37 *— | 16,755,000 | 19,004,359 | ||||||
Energy Transfer Partners | ||||||||
5.15% 2/1/43 | 6,045,000 | 6,003,525 | ||||||
5.95% 10/1/43 | 7,585,000 | 8,338,843 | ||||||
9.70% 3/15/19 | 8,000,000 | 10,404,784 | ||||||
EnLink Midstream Partners 4.40% 4/1/24 | 15,260,000 | 15,741,285 | ||||||
Enterprise Products Operating | ||||||||
7.034% 1/15/68 — | 22,204,000 | 25,166,746 | ||||||
8.375% 8/1/66 — | 1,492,000 | 1,690,567 | ||||||
Kinder Morgan Energy Partners 9.00% 2/1/19 | 15,317,000 | 19,616,237 | ||||||
Oleoducto Central 144A 4.00% 5/7/21 # | 5,485,000 | 5,450,280 | ||||||
Plains All American Pipeline 8.75% 5/1/19 | 13,194,000 | 17,035,116 | ||||||
TransCanada PipeLines 6.35% 5/15/67 — | 16,090,000 | 16,753,713 | ||||||
Williams Partners 7.25% 2/1/17 | 12,358,000 | 14,196,710 | ||||||
|
| |||||||
175,362,084 | ||||||||
|
| |||||||
Real Estate – 1.76% | ||||||||
Alexandria Real Estate Equities 3.90% 6/15/23 | 465,000 | 457,878 | ||||||
CBL & Associates 5.25% 12/1/23 | 5,175,000 | 5,402,710 | ||||||
Corporate Office Properties | ||||||||
3.60% 5/15/23 | 6,500,000 | 6,175,234 | ||||||
5.25% 2/15/24 | 5,275,000 | 5,636,575 | ||||||
DDR | ||||||||
4.625% 7/15/22 | 3,385,000 | 3,610,143 | ||||||
4.75% 4/15/18 | 7,195,000 | 7,826,030 | ||||||
7.50% 4/1/17 | 4,935,000 | 5,699,066 | ||||||
7.875% 9/1/20 | 7,204,000 | 9,020,978 | ||||||
Digital Realty Trust | ||||||||
5.25% 3/15/21 * | 15,133,000 | 16,031,355 | ||||||
5.875% 2/1/20 * | 6,915,000 | 7,627,300 | ||||||
Duke Realty 3.625% 4/15/23 | 6,965,000 | 6,717,854 | ||||||
National Retail Properties 3.80% 10/15/22 | 2,045,000 | 2,043,100 | ||||||
Prologis 3.35% 2/1/21 | 1,205,000 | 1,215,749 | ||||||
Regency Centers | ||||||||
4.80% 4/15/21 | 8,610,000 | 9,253,296 | ||||||
5.875% 6/15/17 | 2,018,000 | 2,274,928 | ||||||
Weyerhaeuser 4.625% 9/15/23 | 6,680,000 | 7,071,147 | ||||||
WP Carey 4.60% 4/1/24 | 4,605,000 | 4,708,424 | ||||||
|
| |||||||
100,771,767 | ||||||||
|
|
32
Principal amount° | Value (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Services – 1.07% | ||||||||
Algeco Scotsman Global Finance | ||||||||
144A 8.50% 10/15/18 # | 5,880,000 | $ | 6,350,400 | |||||
144A 10.75% 10/15/19 # | 6,421,000 | 6,902,575 | ||||||
Ameristar Casinos 7.50% 4/15/21 | 5,395,000 | 5,880,550 | ||||||
Avis Budget Car Rental 5.50% 4/1/23 | 4,790,000 | 4,861,850 | ||||||
Corrections Corporation of America 4.625% 5/1/23 | 3,851,000 | 3,773,980 | ||||||
DigitalGlobe 5.25% 2/1/21 * | 1,830,000 | 1,793,400 | ||||||
H&E Equipment Services 7.00% 9/1/22 | 5,153,000 | 5,694,065 | ||||||
Mattamy Group 144A 6.50% 11/15/20 # | 233,000 | 236,495 | ||||||
MGM Resorts International | ||||||||
6.75% 10/1/20 | 1,010,000 | 1,118,676 | ||||||
7.75% 3/15/22 * | 157,000 | 182,983 | ||||||
11.375% 3/1/18 | 7,287,000 | 9,473,100 | ||||||
PHH 7.375% 9/1/19 | 3,243,000 | 3,599,730 | ||||||
Pinnacle Entertainment 7.75% 4/1/22 * | 98,000 | 106,820 | ||||||
Service Corporation International 144A 5.375% 5/15/24 # | 4,020,000 | 4,055,175 | ||||||
United Rentals North America 5.75% 11/15/24 | 3,855,000 | 4,004,381 | ||||||
Wynn Las Vegas 144A 4.25% 5/30/23 # | 2,975,000 | 2,870,875 | ||||||
|
| |||||||
60,905,055 | ||||||||
|
| |||||||
Technology – 2.36% | ||||||||
Activision Blizzard 144A 6.125% 9/15/23 # | 3,385,000 | 3,689,650 | ||||||
Apple 3.45% 5/6/24 | 6,540,000 | 6,565,408 | ||||||
Avaya 144A 7.00% 4/1/19 #* | 3,011,000 | 3,011,000 | ||||||
Baidu 3.25% 8/6/18 | 8,445,000 | 8,647,680 | ||||||
BMC Software Finance 144A 8.125% 7/15/21 # | 10,115,000 | 10,646,037 | ||||||
First Data | ||||||||
11.25% 1/15/21 | 11,630,000 | 13,345,425 | ||||||
11.75% 8/15/21 | 2,385,000 | 2,551,950 | ||||||
Freescale Semiconductor 144A 6.00% 1/15/22 # | 2,005,000 | 2,100,237 | ||||||
International Business Machines 3.625% 2/12/24 | 8,580,000 | 8,715,624 | ||||||
Jabil Circuit 7.75% 7/15/16 | 1,178,000 | 1,342,920 | ||||||
National Semiconductor 6.60% 6/15/17 | 23,182,000 | 26,870,766 | ||||||
NCR 144A 6.375% 12/15/23 # | 3,750,000 | 4,031,250 | ||||||
NetApp | ||||||||
2.00% 12/15/17 | 5,765,000 | 5,862,140 | ||||||
3.25% 12/15/22 | 6,405,000 | 6,025,299 | ||||||
NXP Funding 144A 5.75% 3/15/23 # | 2,055,000 | 2,178,300 | ||||||
Samsung Electronics America 144A 1.75% 4/10/17 # | 10,895,000 | 10,927,609 | ||||||
Seagate HDD Cayman 144A 4.75% 6/1/23 # | 4,640,000 | 4,669,000 | ||||||
SunGard Availability Services Capital 144A 8.75% 4/1/22 # | 1,535,000 | 1,488,950 | ||||||
Viasystems 144A 7.875% 5/1/19 # | 96,000 | 102,720 |
33
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||||||
Corporate Bonds (continued) | ||||||||||||
Technology (continued) | ||||||||||||
Xerox 6.35% 5/15/18 | 10,448,000 | $ | 12,173,790 | |||||||||
|
| |||||||||||
134,945,755 | ||||||||||||
|
| |||||||||||
Transportation – 1.22% | ||||||||||||
Brambles USA 144A 5.35% 4/1/20 # | 6,810,000 | 7,466,913 | ||||||||||
Burlington Northern Santa Fe 3.85% 9/1/23 | 12,135,000 | 12,555,526 | ||||||||||
DP World 144A 6.85% 7/2/37 # | 2,520,000 | 2,753,100 | ||||||||||
DP World Sukuk 144A 6.25% 7/2/17 # | 3,170,000 | 3,526,625 | ||||||||||
ERAC USA Finance 144A 5.25% 10/1/20 # | 28,100,000 | 31,696,659 | ||||||||||
Hunt (J.B.) Transport Services | ||||||||||||
2.40% 3/15/19 | 1,225,000 | 1,230,264 | ||||||||||
3.85% 3/15/24 | 3,840,000 | 3,894,643 | ||||||||||
Red de Carreteras de Occidente 144A 9.00% 6/10/28 # | MXN | 60,960,000 | 4,346,948 | |||||||||
United Airlines 2014-1 Class A Pass Through Trust | ||||||||||||
4.00% 4/11/26 ¿ | 2,285,000 | 2,307,850 | ||||||||||
|
| |||||||||||
69,778,528 | ||||||||||||
|
| |||||||||||
Utilities – 0.62% | ||||||||||||
AES | ||||||||||||
5.50% 3/15/24 | 1,550,000 | 1,553,875 | ||||||||||
7.375% 7/1/21 | 3,062,000 | 3,521,300 | ||||||||||
Calpine 144A 6.00% 1/15/22 # | 5,255,000 | 5,609,713 | ||||||||||
Elwood Energy 8.159% 7/5/26 | 2,462,165 | 2,720,692 | ||||||||||
Entergy Arkansas 3.70% 6/1/24 | 2,215,000 | 2,278,396 | ||||||||||
NRG Energy 144A 6.25% 5/1/24 # | 1,485,000 | 1,492,425 | ||||||||||
Saudi Electricity Global Sukuk | ||||||||||||
144A 4.00% 4/8/24 # | 4,719,000 | 4,760,291 | ||||||||||
144A 5.50% 4/8/44 #* | 2,183,000 | 2,237,575 | ||||||||||
State Grid Overseas Investment 2014 | ||||||||||||
144A 2.75% 5/7/19 # | 3,430,000 | 3,422,214 | ||||||||||
144A 4.125% 5/7/24 # | 7,770,000 | 7,775,998 | ||||||||||
|
| |||||||||||
35,372,479 | ||||||||||||
|
| |||||||||||
Total Corporate Bonds (cost $3,105,007,649) | 3,252,588,649 | |||||||||||
|
| |||||||||||
Municipal Bonds – 0.62% | ||||||||||||
California Statewide Communities Development Authority (Kaiser Permanente) | ||||||||||||
Series A 5.00% 4/1/42 | �� | 2,460,000 | 2,620,343 | |||||||||
Golden State, California Tobacco Securitization Corporation Settlement Revenue (Asset-Backed Senior Notes) Series A-1 | ||||||||||||
5.125% 6/1/47 | 6,330,000 | 4,824,409 | ||||||||||
5.75% 6/1/47 | 7,005,000 | 5,799,650 |
34
Principal amount° | Value (U.S. $) | |||||||
Municipal Bonds (continued) | ||||||||
New Jersey Transportation Trust Fund | ||||||||
Series A 5.00% 6/15/42 | 1,285,000 | $ | 1,356,446 | |||||
Series AA 5.00% 6/15/44 | 4,080,000 | 4,323,535 | ||||||
New York City, New York | ||||||||
Series I 5.00% 8/1/22 | 2,680,000 | 3,191,424 | ||||||
New York City Water & Sewer System | ||||||||
(Second Generation) Series BB 5.00% 6/15/47 | 1,355,000 | 1,450,406 | ||||||
New York State Thruway Authority Revenue | ||||||||
Series A 5.00% 5/1/19 | 3,145,000 | 3,645,432 | ||||||
Oregon State Taxable Pension | ||||||||
5.892% 6/1/27 | 305,000 | 366,622 | ||||||
State of Maryland Local Facilities | ||||||||
Series A 5.00% 8/1/21 | 3,960,000 | 4,811,440 | ||||||
Texas Private Activity Bond Surface Transportation Senior | ||||||||
Lien Revenue Bond (NTE Mobility) | ||||||||
6.75% 6/30/43 (AMT) | 2,795,000 | 3,178,446 | ||||||
|
| |||||||
Total Municipal Bonds (cost $33,930,331) | 35,568,153 | |||||||
|
| |||||||
Non-Agency Asset-Backed Securities – 0.71% | ||||||||
Ally Master Owner Trust | ||||||||
Series 2013-2 A 0.602% 4/15/18 — | 5,000,000 | 5,009,895 | ||||||
Series 2014-1 A1 0.622% 1/15/19 — | 2,750,000 | 2,753,762 | ||||||
Ameriquest Mortgage Securities Asset-Backed Pass | ||||||||
Through Certificates | ||||||||
Series 2003-8 AF4 5.82% 10/25/33 ¿ | 65,350 | 66,156 | ||||||
Avis Budget Rental Car Funding AESOP | ||||||||
Series 2013-1A A 144A 1.92% 9/20/19 # | 5,895,000 | 5,853,588 | ||||||
California Republic Auto Receivables Trust | ||||||||
Series 2013-1 A2 144A 1.41% 9/17/18 # | 3,765,713 | 3,787,885 | ||||||
Capital One Multi-Asset Execution Trust | ||||||||
Series 2007-A1 A1 0.202% 11/15/19 — | 1,500,000 | 1,490,933 | ||||||
Series 2007-A7 A7 5.75% 7/15/20 | 300,000 | 342,344 | ||||||
Chase Issuance Trust | ||||||||
Series 2014-A2 A2 2.77% 3/15/23 | 8,185,000 | 8,212,878 | ||||||
Citicorp Residential Mortgage Trust | ||||||||
Series 2006-3 A4 5.703% 11/25/36 f | 3,596,320 | 3,587,387 | ||||||
Citifinancial Mortgage Securities | ||||||||
Series 2003-2 AF4 4.598% 5/25/33 | 253,832 | 251,926 | ||||||
Contimortgage Home Equity Loan Trust | ||||||||
Series 1996-4 A8 7.22% 1/15/28 | 5,168 | 5,117 | ||||||
Countrywide Asset-Backed Certificates | ||||||||
Series 2006-13 1AF3 5.016% 1/25/37 — | 20,962 | 22,979 | ||||||
Discover Card Execution Note Trust | ||||||||
Series 2012-A1 A1 0.81% 8/15/17 | 10,000 | 10,037 |
35
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Non-Agency Asset-Backed Securities (continued) | ||||||||
FRS I | ||||||||
Series 2013-1A A1 144A 1.80% 4/15/43 # | 2,405,440 | $ | 2,392,924 | |||||
Golden Credit Card Trust | ||||||||
Series 2012-5A A 144A 0.79% 9/15/17 # | 4,440,000 | 4,447,921 | ||||||
Great America Leasing Receivables | ||||||||
Series 2013-1 B 144A 1.44% 5/15/18 # | 945,000 | 942,939 | ||||||
MASTR Specialized Loan Trust | ||||||||
Series 2005-2 A2 144A 5.006% 7/25/35 #— | 198,765 | 199,098 | ||||||
Mid-State Trust XI | ||||||||
Series 11 A1 4.864% 7/15/38 | 354,203 | 377,797 | ||||||
RASC Trust | ||||||||
Series 2006-EMX1 A2 0.382% 1/25/36 — | 1,005,793 | 1,001,407 | ||||||
Series 2006-KS3 AI3 0.322% 4/25/36 — | 6,700 | 6,674 | ||||||
|
| |||||||
Total Non-Agency Asset-Backed Securities | 40,763,647 | |||||||
|
| |||||||
Non-Agency Collateralized Mortgage Obligations – 0.99% | ||||||||
Alternative Loan Trust | ||||||||
Series 2005-57CB 4A3 5.50% 12/25/35 | 427,142 | 375,320 | ||||||
American Home Mortgage Investment Trust | ||||||||
Series 2005-2 5A1 5.064% 9/25/35 f | 707,855 | 724,430 | ||||||
Bank of America Alternative Loan Trust | ||||||||
Series 2005-1 2A1 5.50% 2/25/20 | 249,891 | 255,941 | ||||||
Series 2005-3 2A1 5.50% 4/25/20 | 231,115 | 238,973 | ||||||
Series 2005-6 7A1 5.50% 7/25/20 | 982,949 | 1,002,948 | ||||||
Bank of America Mortgage Trust | ||||||||
Series 2003-E 2A2 2.856% 6/25/33 — | 100,588 | 100,461 | ||||||
Chase Mortgage Finance Trust | ||||||||
Series 2005-A1 3A1 2.54% 12/25/35 — | 729,209 | 648,399 | ||||||
ChaseFlex Trust | ||||||||
Series 2006-1 A4 5.219% 6/25/36 — | 6,119,000 | 5,319,638 | ||||||
CHL Mortgage Pass Through Trust | ||||||||
Series 2003-21 A1 2.778% 5/25/33 ¿— | 37,097 | 37,691 | ||||||
Series 2004-HYB2 2A 2.588% 7/20/34 ¿— | 120,310 | 109,430 | ||||||
Series 2004-HYB5 3A1 2.618% 4/20/35 ¿— | 155,700 | 137,616 | ||||||
CIFC Funding | ||||||||
Series 2013-2A A1L 144A 1.476% 4/21/25 #— | 10,000,000 | 9,643,500 | ||||||
Citicorp Mortgage Securities Trust | ||||||||
Series 2006-3 1A9 5.75% 6/25/36 | 808,951 | 833,295 | ||||||
Citicorp Residential Mortgage Trust | ||||||||
Series 2006-3 A5 5.948% 11/25/36 f | 5,800,000 | 5,563,569 | ||||||
Credit Suisse First Boston Mortgage Securities | ||||||||
Series 2005-5 6A3 5.00% 7/25/35 | 4,160,983 | 4,170,187 |
36
Principal amount° | Value (U.S. $) | |||||||
Non-Agency Collateralized Mortgage Obligations (continued) | ||||||||
First Horizon Mortgage Pass Through Trust | ||||||||
Series 2004-5 2A1 6.25% 8/25/17 ¿ | 8,657 | $ | 8,855 | |||||
GSMPS Mortgage Loan Trust | ||||||||
Series 1998-3 A 144A 7.75% 9/19/27 #— | 55,183 | 57,957 | ||||||
GSR Mortgage Loan Trust | ||||||||
Series 2004-9 4A1 2.669% 8/25/34 — | 763,937 | 745,053 | ||||||
Series 2006-AR1 3A1 2.824% 1/25/36 — | 760,334 | 668,005 | ||||||
JPMorgan Mortgage Trust | ||||||||
Series 2005-A8 1A1 5.074% 11/25/35 — | 503,359 | 482,916 | ||||||
Series 2006-A2 3A3 5.101% 4/25/36 — | 1,691,117 | 1,545,386 | ||||||
Series 2006-S1 1A1 6.00% 4/25/36 | 4,280,634 | 4,280,908 | ||||||
Series 2007-A1 7A4 2.676% 7/25/35 — | 114,534 | 102,258 | ||||||
MASTR ARM Trust | ||||||||
Series 2003-6 1A2 2.45% 12/25/33 — | 44,794 | 44,444 | ||||||
Series 2004-10 2A2 3.087% 10/25/34 — | 61,003 | 29,123 | ||||||
Series 2005-6 7A1 5.193% 6/25/35 — | 904,607 | 853,414 | ||||||
Series 2006-2 4A1 2.626% 2/25/36 — | 216,095 | 210,491 | ||||||
Structured Asset Securities Corporation Mortgage Pass | ||||||||
Through Certificates | ||||||||
Series 2004-20 2A1 5.50% 11/25/34 ¿ | 4,024,650 | 4,109,723 | ||||||
Washington Mutual Alternative Mortgage Pass Through | ||||||||
Certificates | ||||||||
Series 2005-1 5A2 6.00% 3/25/35 ¿ | 368,367 | 197,001 | ||||||
Washington Mutual Mortgage Pass Through Certificates | ||||||||
Series 2003-S10 A2 5.00% 10/25/18 ¿ | 227,080 | 233,256 | ||||||
Series 2006-AR14 2A1 2.031% 11/25/36 ¿— | 4,402,472 | 3,652,035 | ||||||
Wells Fargo Mortgage-Backed Securities Trust | ||||||||
Series 2005-18 1A1 5.50% 1/25/36 | 820,345 | 794,313 | ||||||
Series 2006-2 3A1 5.75% 3/25/36 | 2,759,659 | 2,816,960 | ||||||
Series 2006-3 A11 5.50% 3/25/36 | 2,609,935 | 2,701,797 | ||||||
Series 2006-20 A1 5.50% 12/25/21 | 1,197,664 | 1,219,794 | ||||||
Series 2006-AR5 2A1 2.615% 4/25/36 — | 2,161,812 | 2,090,373 | ||||||
Series 2007-8 2A6 6.00% 7/25/37 | 183,328 | 177,717 | ||||||
Series 2007-14 1A1 6.00% 10/25/37 | 157,659 | 160,664 | ||||||
|
| |||||||
Total Non-Agency Collateralized Mortgage Obligations (cost $52,478,755) | 56,343,841 | |||||||
|
| |||||||
Senior Secured Loans – 10.89%« | ||||||||
ABC Supply Tranche B 1st Lien 3.50% 4/5/20 | 2,477,550 | 2,489,227 | ||||||
Air Medical Group Holdings Tranche B1 5.00% 5/29/18 | 2,555,705 | 2,570,081 | ||||||
Albertsons Tranche B 4.25% 3/21/16 | 2,465,977 | 2,475,224 | ||||||
Allegion US Holding Tranche B 0.75% 12/26/20 | 2,014,950 | 2,016,209 | ||||||
Applied Systems 1st Lien 4.25% 1/15/21 | 2,673,300 | 2,676,086 | ||||||
Applied Systems 2nd Lien 7.50% 1/15/22 | 735,000 | 745,290 |
37
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Senior Secured Loans« (continued) | ||||||||
ARAMARK Tranche E 3.25% 9/7/19 | 2,250,000 | $ | 2,232,522 | |||||
Arysta Lifescience 1st Lien 4.50% 5/20/20 | 1,935,374 | 1,935,359 | ||||||
Arysta Lifescience 2nd Lien 8.25% 11/22/20 | 2,560,000 | 2,616,000 | ||||||
Atkore International 2nd Lien 7.75% 9/27/21 | 2,465,000 | 2,475,784 | ||||||
Avast Software 1st Lien 5.00% 3/18/20 | 4,940,000 | 4,934,853 | ||||||
Axalta Coating Systems US Holdings 1st Lien | 4,828,513 | 4,822,144 | ||||||
Azure Midstream Tranche B 6.50% 10/21/18 | 4,537,563 | 4,577,266 | ||||||
Bally Technologies Tranche B 4.25% 8/22/20 | 8,258,500 | 8,273,935 | ||||||
Biomet 1st Lien 3.50% 7/25/17 | 2,843,513 | 2,851,383 | ||||||
BJ’s Wholesale Club 2nd Lien 8.50% 3/31/20 | 10,745,000 | 10,985,806 | ||||||
BJ’s Wholesale Club Tranche B 1st Lien 4.50% 9/26/19 | 2,326,218 | 2,326,864 | ||||||
Bombardier Recreational Products Tranche B 1st Lien | 3,570,086 | 3,561,532 | ||||||
Bowie Recourse Tranche B 1st Lien 6.75% 8/9/20 | 4,119,375 | 4,165,718 | ||||||
Burlington Coat Factory Warehouse Tranche B2 | 9,593,091 | 9,635,061 | ||||||
Caesars Growth Partners 1st Lien 6.25% 4/10/21 | 10,310,000 | 10,281,008 | ||||||
Calpine Construction Finance Tranche B 3.00% 5/1/20 | 5,180,850 | 5,062,664 | ||||||
Calpine Construction Finance Tranche B2 3.25% 1/31/22 | 309,223 | 303,716 | ||||||
Chrysler Group Tranche B 1st Lien | 10,325,000 | 10,252,725 | ||||||
3.50% 5/24/17 | 1,989,999 | 1,989,999 | ||||||
Citycenter Holdings Tranche B 5.00% 10/9/20 | 2,972,550 | 2,991,592 | ||||||
Clear Channel Communications Tranche B 3.65% 1/29/16 | 10,278,473 | 10,202,782 | ||||||
Clear Channel Communications Tranche D 6.75% 1/30/19 | 2,250,000 | 2,234,813 | ||||||
Clear Channel Communications Tranche E 1st Lien | 5,984,729 | 6,002,599 | ||||||
Community Health Systems Tranche D 4.25% 1/27/21 | 5,658,487 | 5,683,220 | ||||||
Community Health Systems Tranche E 3.25% 1/25/17 | 1,157,431 | 1,159,808 | ||||||
Crown Castles Operating Tranche B2 3.25% 1/31/21 | 5,491,573 | 5,464,494 | ||||||
DaVita Tranche B 4.50% 10/20/16 | 6,642,684 | 6,653,757 | ||||||
Davita Tranche B2 4.00% 8/1/19 | 4,833,813 | 4,853,201 | ||||||
Delta Air Lines Tranche B 1st Lien 3.50% 4/20/17 | 10,324,040 | 10,304,631 | ||||||
Diamond Reports 1st Lien 5.50% 4/25/21 | 5,020,000 | 5,029,413 | ||||||
Drillships Financing Holding Tranche B1 6.00% 2/17/21 | 10,834,559 | 10,990,306 | ||||||
Dynegy Tranche B2 4.00% 4/16/20 | 7,887,610 | 7,884,763 | ||||||
Emdeon 1st Lien 3.75% 11/2/18 | 7,373,003 | 7,367,244 | ||||||
Equipower Resources Holdings Tranche B | 2,014,077 | 2,017,854 | ||||||
Exgen Renewables I 1st Lien 5.25% 2/5/21 | 1,487,490 | 1,511,662 | ||||||
Exide Technologies DIP 9.00% 10/9/14 | 5,000,000 | 5,125,000 | ||||||
Fieldwood Energy 2nd Lien 8.375% 9/30/20 | 3,175,000 | 3,282,950 | ||||||
First Data Tranche B 1st Lien 4.00% 3/24/21 | 11,597,445 | 11,595,995 |
38
Principal amount° | Value (U.S. $) | |||||||
Senior Secured Loans« (continued) | ||||||||
Flying Fortress 1st Lien 3.50% 6/30/17 | 1,225,209 | $ | 1,226,358 | |||||
Gardner Denver 1st Lien 4.25% 7/23/20 | 4,641,675 | 4,638,509 | ||||||
Generac Power Systems Tranche B 3.50% 5/10/20 | 3,757,342 | 3,746,776 | ||||||
Gentiva Health Services Tranche B 6.50% 10/10/19 | 927,675 | 919,268 | ||||||
Gentiva Health Services Tranche C 5.75% 10/10/18 | 878,219 | 871,632 | ||||||
Gray Television 4.75% 10/11/19 | 3,287,494 | 3,298,796 | ||||||
Great Wolf Resorts 1st Lien 4.50% 7/31/20 | 2,401,850 | 2,404,852 | ||||||
HCA Tranche B4 2.75% 5/1/18 | 1,791,000 | 1,791,186 | ||||||
HD Supply Tranche B 4.00% 6/28/18 | 7,387,784 | 7,388,553 | ||||||
Hilton Worldwide Finance Tranche B2 3.50% 9/23/20 | 5,731,316 | 5,719,773 | ||||||
Hostess Brands 1st Lien 6.75% 3/12/20 | 2,755,000 | 2,865,200 | ||||||
Houghton International 1st Lien 4.00% 12/10/19 | 1,896,000 | 1,891,260 | ||||||
Houghton International 2nd Lien 9.50% 11/20/20 | 2,605,000 | 2,666,869 | ||||||
Hudson’s Bay Tranche B 1st Lien 4.75% 10/7/20 | 3,829,500 | 3,863,606 | ||||||
Huntsman International Tranche B 3.75% 10/11/20 | 5,865,000 | 5,862,068 | ||||||
IASIS Healthcare Tranche B 1st Lien 4.50% 5/3/18 | 8,095,117 | 8,108,271 | ||||||
Ikaria 5.00% 2/4/22 | 5,320,000 | 5,349,372 | ||||||
Immucor Tranche B2 5.00% 8/19/18 | 9,809,574 | 9,846,360 | ||||||
Ineos US Finance Tranche B 3.75% 5/4/18 | 6,023,384 | 5,976,594 | ||||||
Infor US Tranche B5 1st Lien 3.75% 6/3/20 | 4,956,228 | 4,929,236 | ||||||
Intelsat Jackson Holdings Tranche B2 3.75% 6/30/19 | 11,082,366 | 11,093,914 | ||||||
J. Crew Group Tranche B 1st Lien 4.00% 2/28/21 | 2,045,000 | 2,036,820 | ||||||
KIK Custom Products 1st Lien 5.50% 5/17/19 | 8,561,273 | 8,565,288 | ||||||
Kinetic Concepts Tranche E1 4.00% 5/8/18 | 1,800,943 | 1,803,516 | ||||||
La Frontera Generation Tranche B 4.50% 9/30/20 | 1,765,440 | 1,767,646 | ||||||
La Quinta Intermediate Holdings Tranche B | 2,185,000 | 2,179,538 | ||||||
Landry’s Tranche B 4.75% 4/24/18 | 7,359,528 | 7,375,630 | ||||||
Level 3 Financing Tranche B 4.00% 1/15/20 | 10,170,000 | 10,173,814 | ||||||
Lightower Fiber Networks 4.00% 4/1/20 | 980,879 | 979,653 | ||||||
LTS Buyer 2nd Lien 8.00% 3/15/21 | 3,141,138 | 3,190,871 | ||||||
Men’s Wearhouse Tranche B 1st Lien 4.50% 4/16/21 | 1,965,000 | 1,962,298 | ||||||
MGM Resorts International Tranche B 1st Lien | 4,981,938 | 4,958,587 | ||||||
Michael Stores Tranche B 1st Lien 3.75% 1/16/20 | 2,318,076 | 2,318,904 | ||||||
Moxie Liberty Tranche B 7.50% 8/21/20 | 6,186,000 | 6,356,115 | ||||||
Moxie Patriot (Panda Power Fund) Tranche B1 | 4,500,000 | 4,620,938 | ||||||
National Vision 4.00% 3/6/21 | 1,445,000 | 1,436,571 | ||||||
NEP Broadcasting 2nd Lien 9.50% 7/3/20 | 6,737,857 | 6,927,359 | ||||||
NEP/NCP Trance B 1st Lien 4.25% 1/22/20 | 815,000 | 814,491 | ||||||
Numericable 4.50% 4/23/20 | 6,130,000 | 6,114,675 | ||||||
Nuveen Investments 1st Lien 4.00% 5/13/17 | 4,375,000 | 4,380,810 |
39
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||
Senior Secured Loans« (continued) | ||||||||
Nuveen Investments 2nd Lien 6.50% 2/28/19 | 27,877,000 | $ | 28,061,183 | |||||
OSI Restaurants Tranche B 1st Lien 3.50% 10/26/19 | 3,820,487 | 3,816,010 | ||||||
Otter Products Tranche B 5.25% 4/29/19 | 6,246,625 | 6,249,230 | ||||||
Panda Temple Power II Tranche B 1st Lien 7.25% 3/28/19 | 5,146,000 | 5,290,731 | ||||||
Patheon 1st Lien 4.25% 1/23/21 | 4,930,000 | 4,887,632 | ||||||
Peabody Energy Tranche B 4.25% 9/20/20 | 4,557,100 | 4,561,849 | ||||||
Pharmaceutical Product Development 4.00% 12/5/18 | 4,029,000 | 4,027,993 | ||||||
Pinnacle Entertainment Tranche B2 3.75% 8/13/20 | 1,303,568 | 1,301,938 | ||||||
Ply Gem Industries 1st Lien 4.00% 1/22/21 | 2,540,000 | 2,527,300 | ||||||
Polymer Group Tranche B 5.25% 12/13/19 | 1,995,000 | 2,002,481 | ||||||
PVH Tranche B 3.25% 12/19/19 | 4,303,736 | 4,321,880 | ||||||
Quickrete 2nd Lien 7.00% 3/19/21 | 3,475,000 | 3,566,219 | ||||||
Ranpak 2nd Lien 8.50% 4/10/20 | 3,970,000 | 4,089,100 | ||||||
Regent Seven Seas Cruises Tranche B 1st Lien | 4,289,250 | 4,278,527 | ||||||
Remy International Tranche B 1st Lien 4.25% 3/5/20 | 3,292,061 | 3,300,291 | ||||||
Reynolds Group 1st Lien 4.00% 12/31/18 | 8,585,611 | 8,602,379 | ||||||
Rite Aid 2nd Lien 5.75% 8/3/20 | 7,370,000 | 7,541,353 | ||||||
Salix Pharmaceuticals Tranche B 4.25% 12/17/19 | 1,975,000 | 1,986,520 | ||||||
Samson Investment 2nd Lien 5.00% 9/25/18 | 6,699,000 | 6,713,657 | ||||||
Santander Asset Management Tranche B 4.25% 11/26/20 | 2,339,138 | 2,336,214 | ||||||
SBA Communications Tranche B 1st Lien 3.25% 3/31/21 | 1,152,000 | 1,146,480 | ||||||
Scientific Games International 4.25% 5/22/20 | 9,970,013 | 9,952,565 | ||||||
Sensus 2nd Lien 8.50% 4/13/18 | 2,660,000 | 2,674,963 | ||||||
Smart & Final Tranche B 1st Lien 4.75% 11/15/19 | 6,399,597 | 6,400,595 | ||||||
Sprouts Farmers Markets Holdings 4.00% 4/12/20 | 4,098,076 | 4,103,198 | ||||||
Stena 1st Lien 4.00% 2/21/21 | 1,145,000 | 1,141,422 | ||||||
Sungard Availability Services Capital Tranche B 1st Lien | 5,185,000 | 5,159,075 | ||||||
Supervalu 1st Lien 4.50% 3/21/19 | 3,187,807 | 3,183,538 | ||||||
Surgical Care Affiliates 4.00% 6/30/17 | 4,644,201 | 4,632,590 | ||||||
Surgical Care Affiliates Tranche C 4.25% 6/30/18 | 987,538 | 989,389 | ||||||
Taminco Global Chemical Tranche B 3.25% 2/15/19 | 2,282,169 | 2,267,193 | ||||||
TransDigm Tranche C 3.75% 2/7/20 | 5,848,790 | 5,828,226 | ||||||
Truven Health Analytics Tranche B 4.50% 5/23/19 | 2,623,105 | 2,608,350 | ||||||
United Continental Tranche B 3.50% 4/1/19 | 3,073,950 | 3,059,041 | ||||||
Univision Communications 1st Lien 4.00% 3/1/20 | 2,148,300 | 2,139,286 | ||||||
Univision Communications Tranche C4 4.00% 3/1/20 | 15,420,618 | 15,364,163 | ||||||
US Airways Tranche B1 3.50% 5/23/19 | 3,245,000 | 3,222,691 | ||||||
US Airways Tranche B2 3.00% 11/23/16 | 1,008,406 | 1,009,793 | ||||||
USI Insurance Services Tranche B 1st Lien 4.25% 12/3/18 | 8,912,526 | 8,890,245 |
40
Principal amount° | Value (U.S. $) | |||||||||||
Senior Secured Loans« (continued) | ||||||||||||
Valeant Pharmaceuticals International Tranche BE | 9,279,854 | $ | 9,288,234 | |||||||||
Vantage Drilling Tranche B 1st Lien 5.00% 10/25/17 | 2,746,870 | 2,740,863 | ||||||||||
Wide Open West Finance 4.75% 3/27/19 | 12,785,850 | 12,827,800 | ||||||||||
Windstream Tranche B3 1st Lien 3.50% 8/8/19 | 37,406 | 37,289 | ||||||||||
Zayo Group Tranche B 1st Lien 4.00% 7/2/19 | 9,609,346 | 9,601,341 | ||||||||||
Ziggo Tranche B 2nd Lien 3.50% 1/15/22 | 1,358,298 | 1,336,508 | ||||||||||
Ziggo Tranche B 3rd Lien 3.50% 1/20/22 | 2,233,915 | 2,198,078 | ||||||||||
Ziggo Tranche B1 1st Lien 3.50% 1/15/22 | 2,107,787 | 2,073,974 | ||||||||||
|
| |||||||||||
Total Senior Secured Loans (cost $619,441,028) | 622,373,894 | |||||||||||
|
| |||||||||||
Sovereign Bonds – 2.07%D | ||||||||||||
Azerbaijan – 0.10% | ||||||||||||
Republic of Azerbaijan International Bond 144A | ||||||||||||
4.75% 3/18/24 # | 5,497,000 | 5,566,812 | ||||||||||
|
| |||||||||||
5,566,812 | ||||||||||||
|
| |||||||||||
Brazil – 0.04% | ||||||||||||
Brazil Notas do Tesouro Nacional Series F 10.00% 1/1/17 | BRL | 4,972,968 | 2,121,607 | |||||||||
|
| |||||||||||
2,121,607 | ||||||||||||
|
| |||||||||||
Finland – 0.04% | ||||||||||||
Finland Government Bond 2.25% 3/6/18 | NOK | 13,000,000 | 2,173,063 | |||||||||
|
| |||||||||||
2,173,063 | ||||||||||||
|
| |||||||||||
Gabon – 0.12% | ||||||||||||
Gabonese Republic 144A 6.375% 12/12/24 # | 6,370,000 | 6,822,270 | ||||||||||
|
| |||||||||||
6,822,270 | ||||||||||||
|
| |||||||||||
Iceland – 0.10% | ||||||||||||
Republic of Iceland 144A 5.875% 5/11/22 # | 5,275,000 | 5,752,403 | ||||||||||
|
| |||||||||||
5,752,403 | ||||||||||||
|
| |||||||||||
Indonesia – 0.32% | ||||||||||||
Indonesia Government International Bond | ||||||||||||
144A 3.375% 4/15/23 # | 10,812,000 | 9,852,435 | ||||||||||
144A 5.875% 1/15/24 # | 3,226,000 | 3,500,210 | ||||||||||
Perusahaan Penerbit SBSN 144A 6.125% 3/15/19 # | 4,390,000 | 4,850,950 | ||||||||||
|
| |||||||||||
18,203,595 | ||||||||||||
|
| |||||||||||
Ivory Coast – 0.07% | ||||||||||||
Ivory Coast Government International Bond | ||||||||||||
5.75% 12/31/32 f | 4,091,000 | 3,877,041 | ||||||||||
|
| |||||||||||
3,877,041 | ||||||||||||
|
| |||||||||||
Mexico – 0.11% | ||||||||||||
Mexican Bonos | ||||||||||||
6.50% 6/10/21 | MXN | 4,573,100 | 366,357 |
41
Schedule of investments
Delaware Diversified Income Fund
Principal amount° | Value (U.S. $) | |||||||||||
Sovereign BondsD (continued) | ||||||||||||
Mexico (continued) | ||||||||||||
Mexican Bonos | ||||||||||||
6.50% 6/9/22 | MXN | 75,281,000 | $ | 5,950,194 | ||||||||
|
| |||||||||||
6,316,551 | ||||||||||||
|
| |||||||||||
Pakistan – 0.10% | ||||||||||||
Pakistan Government International Bond 144A | ||||||||||||
7.25% 4/15/19 # | 5,723,000 | 5,758,769 | ||||||||||
|
| |||||||||||
5,758,769 | ||||||||||||
|
| |||||||||||
Panama – 0.13% | ||||||||||||
Panama Government International Bond 8.875% 9/30/27 | 5,330,000 | 7,528,625 | ||||||||||
|
| |||||||||||
7,528,625 | ||||||||||||
|
| |||||||||||
Paraguay – 0.10% | ||||||||||||
Republic of Paraguay 144A 4.625% 1/25/23 # | 5,640,000 | 5,632,950 | ||||||||||
|
| |||||||||||
5,632,950 | ||||||||||||
|
| |||||||||||
Poland – 0.06% | ||||||||||||
Poland Government Bond | ||||||||||||
4.00% 10/25/23 | PLN | 4,118,000 | 1,357,852 | |||||||||
5.75% 10/25/21 | PLN | 5,321,000 | 1,968,318 | |||||||||
|
| |||||||||||
3,326,170 | ||||||||||||
|
| |||||||||||
Republic of Korea – 0.14% | ||||||||||||
Korea Treasury Inflation-Linked Bond 1.125% 6/10/23 | KRW | 8,817,814,995 | 8,169,303 | |||||||||
|
| |||||||||||
8,169,303 | ||||||||||||
|
| |||||||||||
Romania – 0.07% | ||||||||||||
Romanian Government International Bond 144A | ||||||||||||
4.875% 1/22/24 # | 4,020,000 | 4,241,100 | ||||||||||
|
| |||||||||||
4,241,100 | ||||||||||||
|
| |||||||||||
Slovenia – 0.16% | ||||||||||||
Slovenia Government International Bond | ||||||||||||
144A 4.125% 2/18/19 # | 4,305,000 | 4,444,913 | ||||||||||
144A 5.25% 2/18/24 # | 4,696,000 | 4,895,580 | ||||||||||
|
| |||||||||||
9,340,493 | ||||||||||||
|
| |||||||||||
Sri Lanka – 0.08% | ||||||||||||
Sri Lanka Government International Bond 144A | ||||||||||||
6.00% 1/14/19 #* | 4,433,000 | 4,621,403 | ||||||||||
|
| |||||||||||
4,621,403 | ||||||||||||
|
| |||||||||||
Sweden – 0.09% | ||||||||||||
Sweden Government Bond | ||||||||||||
1.50% 11/13/23 | SEK | 9,755,000 | 1,438,061 | |||||||||
4.25% 3/12/19 | SEK | 12,505,000 | 2,193,273 | |||||||||
5.00% 12/1/20 | SEK | 8,305,000 | 1,550,029 | |||||||||
|
| |||||||||||
5,181,363 | ||||||||||||
|
|
42
Principal amount° | Value (U.S. $) | |||||||||||
Sovereign BondsD (continued) | ||||||||||||
Turkey – 0.08% | ||||||||||||
Hazine Mustesarligi Varlik Kiralama 144A | ||||||||||||
4.557% 10/10/18 # | 4,425,000 | $ | 4,602,000 | |||||||||
|
| |||||||||||
4,602,000 | ||||||||||||
|
| |||||||||||
United Kingdom – 0.05% | ||||||||||||
United Kingdom Gilt 1.25% 7/22/18 | GBP | 1,623,148 | 2,693,499 | |||||||||
|
| |||||||||||
2,693,499 | ||||||||||||
|
| |||||||||||
Zambia – 0.11% | ||||||||||||
Zambia Government International Bond 144A | ||||||||||||
8.50% 4/14/24 # | 6,280,000 | 6,558,675 | ||||||||||
|
| |||||||||||
6,558,675 | ||||||||||||
|
| |||||||||||
Total Sovereign Bonds (cost $115,452,813) | 118,487,692 | |||||||||||
|
| |||||||||||
Supranational Banks – 0.20% | ||||||||||||
African Export-Import Bank 5.75% 7/27/16 | 1,746,000 | 1,867,225 | ||||||||||
Eurasian Development Bank 144A 5.00% 9/26/20 # | 5,000,000 | 4,950,000 | ||||||||||
International Bank for Reconstruction & Development | ||||||||||||
2.865% 9/24/18 — | AUD | 4,747,000 | 4,414,220 | |||||||||
|
| |||||||||||
Total Supranational Banks (cost $11,309,967) | 11,231,445 | |||||||||||
|
| |||||||||||
U.S. Treasury Obligations – 4.36% | ||||||||||||
U.S. Treasury Bonds | ||||||||||||
3.625% 2/15/44 | 167,575,000 | 172,785,577 | ||||||||||
3.75% 11/15/43 ¥ | 27,130,000 | 28,630,615 | ||||||||||
U.S. Treasury Notes | ||||||||||||
1.625% 4/30/19 | 28,605,000 | 28,530,141 | ||||||||||
2.75% 2/15/24 | 18,880,000 | 19,046,673 | ||||||||||
|
| |||||||||||
Total U.S. Treasury Obligations (cost $246,424,585) | 248,993,006 | |||||||||||
|
| |||||||||||
Number of Shares | ||||||||||||
Common Stock – 0.00% | ||||||||||||
Century Communications =† | 7,875,000 | 0 | ||||||||||
|
| |||||||||||
Total Common Stock (cost $238,403) | 0 | |||||||||||
|
| |||||||||||
Convertible Preferred Stock – 0.49% | ||||||||||||
ArcelorMittal 6.00% exercise price $20.61, expiration date 12/21/15 | 106,550 | 2,590,497 | ||||||||||
Bank of America 7.25% exercise price $50.00, expiration date 12/31/49 | 1,465 | 1,670,466 | ||||||||||
Chesapeake Energy 144A 5.75% exercise price $27.77, expiration date 12/31/49 # | 1,633 | 1,937,146 |
43
Schedule of investments
Delaware Diversified Income Fund
Number of Shares | Value (U.S. $) | |||||||
Convertible Preferred Stock (continued) | ||||||||
Dominion Resources | ||||||||
6.00% exercise price $65.21, expiration date 7/1/16 | 23,556 | $ | 1,384,857 | |||||
6.125% exercise price $65.21, expiration date 4/1/16 | 23,556 | 1,380,853 | ||||||
Halcon Resources 5.75% exercise price $6.16, expiration date 12/31/49 | 2,341 | 2,223,950 | ||||||
HealthSouth 6.50% exercise price $30.01, expiration date 12/31/49 | 2,663 | 3,395,991 | ||||||
Huntington Bancshares 8.50% exercise price $11.95, expiration date 12/31/49 | 1,550 | 1,984,000 | ||||||
Intelsat 5.75% exercise price $22.05, expiration date 5/1/16 | 72,141 | 3,688,569 | ||||||
MetLife 5.00% exercise price $44.27, expiration date 3/26/14 | 77,175 | 2,349,979 | ||||||
SandRidge Energy 8.50% exercise price $8.01, expiration date 12/31/49 | 26,122 | 2,889,746 | ||||||
Wells Fargo 7.50% exercise price $156.71, expiration date 12/31/49 | 2,210 | 2,639,812 | ||||||
|
| |||||||
Total Convertible Preferred Stock (cost $27,278,512) | 28,135,866 | |||||||
|
| |||||||
Preferred Stock – 0.62% | ||||||||
Alabama Power 5.625% | 288,353 | 7,079,066 | ||||||
Ally Financial 144A 7.00% #* | 9,820 | 9,774,583 | ||||||
Integrys Energy Group 6.00% — | 205,100 | 5,178,775 | ||||||
National Retail Properties 5.70% | 202,445 | 4,552,988 | ||||||
Public Storage 5.20% | 212,995 | 4,685,890 | ||||||
Regions Financial 6.375% — | 160,200 | 3,980,970 | ||||||
|
| |||||||
Total Preferred Stock (cost $35,964,946) | 35,252,272 | |||||||
|
| |||||||
Number of Contracts | ||||||||
Option Purchased – 0.00% | ||||||||
Currency Call Option – 0.00% | ||||||||
CAD vs USD strike price CAD 1.14, expiration date 9/5/14 | 9,137,736 | 16 | ||||||
|
| |||||||
Total Option Purchased (cost $42,947) | 16 | |||||||
|
|
44
Principal amount° | Value (U.S. $) | |||||||
Short-Term Investments – 7.34% | ||||||||
Repurchase Agreements – 7.32% | ||||||||
Bank of America Merrill Lynch | 79,963,633 | $ | 79,963,633 | |||||
Bank of Montreal 0.03%, | 26,654,544 | 26,654,545 | ||||||
BNP Paribas | 312,182,822 | 312,182,822 | ||||||
|
| |||||||
418,801,000 | ||||||||
|
| |||||||
U.S. Treasury Obligation – 0.02%≠ | ||||||||
U.S. Treasury Bill 0.093% 11/13/14 | 1,026,768 | 1,026,531 | ||||||
|
| |||||||
1,026,531 | ||||||||
|
| |||||||
Total Short-Term Investments (cost $419,827,466) | 419,827,531 | |||||||
|
| |||||||
Total Value of Securities Before Securities | ||||||||
Lending Collateral – 104.19% | 5,955,320,056 | |||||||
|
| |||||||
Number of Shares | ||||||||
Securities Lending Collateral – 2.75%** | ||||||||
Investment Company | ||||||||
Delaware Investments Collateral Fund No. 1 | 157,267,778 | 157,267,778 | ||||||
|
| |||||||
Total Securities Lending Collateral (cost $157,267,778) | 157,267,778 | |||||||
|
| |||||||
Total Value of Securities – 106.94% | $ | 6,112,587,834n | ||||||
|
|
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At April 30, 2014, the aggregate value of Rule 144A securities was $1,244,549,237, which represents 21.77% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
* | Fully or partially on loan. |
** | See note 9 in “Notes to financial statements” for additional information on securities lending collateral. |
@ | Illiquid security. At April 30, 2014, the aggregate value of illiquid securities was $2,749,838, which represents 0.05% of the Fund’s net assets. See Note 10 in “Notes to financial statements.” |
45
Schedule of investments
Delaware Diversified Income Fund
¿ | Pass Through Agreement. Security represents the contractual right to receive a proportionate amount of underlying payments due to the counterparty pursuant to various agreements related to the rescheduling of obligations and the exchange of certain notes. |
T | 100% of the income received was in the form of additional cash. |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At April 30, 2014, 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.” |
≠ | The rate shown is the effective yield at the time of purchase. |
n | Includes $148,758,655 of securities loaned. |
° | Principal amount shown is stated in U.S. dollars unless noted that the security is denominated in another currency. |
† | Non income producing security. |
— | Variable rate security. The rate shown is the rate as of April 30, 2014. Interest rates reset periodically. |
¥ | Fully or partially pledged as collateral for futures contracts. |
D | Securities have been classified by country of origin. |
S | 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. |
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
« | Senior secured loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally: (i) the prime rate offered by one or more United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate (LIBOR), and (iii) the certificate of deposit rate. Senior secured loans may be subject to restrictions on resale. Stated rate in effect at April 30, 2014. |
f | Step coupon bond. Coupon increases or decreases periodically based on a predetermined schedule. Stated rate in effect at April 30, 2014. |
46
The following foreign currency exchange contracts, futures contracts and swap contracts were outstanding at April 30, 2014:1
Foreign Currency Exchange Contracts
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||
BAML | EUR | 357,731 | USD | (494,094 | ) | 5/30/14 | $ | 2,132 | ||||||||||
BAML | GBP | 1,832,914 | USD | (3,080,570 | ) | 5/30/14 | 13,475 | |||||||||||
BAML | NZD | (3,920,295 | ) | USD | 3,347,540 | 5/30/14 | (25,011 | ) | ||||||||||
BCLY | MXN | (36,711,898 | ) | USD | 2,804,790 | 5/30/14 | 5,880 | |||||||||||
BNP | AUD | (11,844,519 | ) | USD | 11,015,544 | 5/30/14 | 32,313 | |||||||||||
BNYM | BRL | 4,892,936 | USD | (2,190,507 | ) | 5/6/14 | (990 | ) | ||||||||||
JPMC | AUD | (1,448,256 | ) | USD | 1,346,541 | 5/30/14 | 3,596 | |||||||||||
JPMC | EUR | (1,411,379 | ) | USD | 1,951,596 | 5/30/14 | (6,197 | ) | ||||||||||
JPMC | GBP | (5,502,177 | ) | USD | 9,242,078 | 5/30/14 | (45,855 | ) | ||||||||||
JPMC | INR | 134,076,437 | USD | (2,204,117 | ) | 5/30/14 | 4,175 | |||||||||||
JPMC | KRW | (7,060,152,950 | ) | USD | 6,781,892 | 5/30/14 | (39,512 | ) | ||||||||||
JPMC | PLN | (3,707,056 | ) | USD | 1,221,261 | 5/30/14 | (657 | ) | ||||||||||
JPMC | SEK | (9,103,922 | ) | USD | 1,379,795 | 5/30/14 | (19,504 | ) | ||||||||||
MSC | CLP | 1,337,145,944 | USD | (2,424,562 | ) | 5/30/14 | (63,427 | ) | ||||||||||
MSC | IDR | 28,097,830,430 | USD | (2,442,228 | ) | 5/30/14 | (20,732 | ) | ||||||||||
MSC | TRY | 40,538 | USD | (18,796 | ) | 5/30/14 | 246 | |||||||||||
TD | CAD | (6,461,252 | ) | USD | 5,856,615 | 5/30/14 | (35,119 | ) | ||||||||||
TD | EUR | (9,137,735 | ) | USD | 12,624,101 | 5/30/14 | (51,299 | ) | ||||||||||
TD | JPY | (27,860,870 | ) | USD | 271,637 | 5/30/14 | (986 | ) | ||||||||||
TD | MXN | 39,548,961 | USD | (3,022,154 | ) | 5/30/14 | (6,948 | ) | ||||||||||
UBS | CAD | (6,520,130 | ) | USD | 5,908,206 | 5/30/14 | (37,216 | ) | ||||||||||
|
| |||||||||||||||||
$ | (291,636 | ) | ||||||||||||||||
|
|
Futures Contracts
Contracts to Buy (Sell) | Notional Cost (Proceeds) | Notional Value | Expiration Date | Unrealized Appreciation (Depreciation) | ||||||||||||||
(15) | Canadian 10 yr Bond | $ | (1,772,832 | ) | $ | (1,792,581 | ) | 6/20/14 | $ | (19,749 | ) | |||||||
(567) | U.S. Treasury 5 yr Note | (67,616,932 | ) | (67,729,922 | ) | 7/1/14 | (112,990 | ) | ||||||||||
605 | U.S. Treasury 10 yr Note | 75,248,047 | 75,275,234 | 7/1/14 | 27,187 | |||||||||||||
343 | U.S. Treasury Long Bond | 45,556,310 | 46,283,563 | 6/19/14 | 727,253 | |||||||||||||
|
|
|
| |||||||||||||||
$ | 51,414,593 | $ | 621,701 | |||||||||||||||
|
|
|
|
47
Schedule of investments
Delaware Diversified Income Fund
Swap Contracts
CDS Contracts2
Counterparty | Swap Referenced Obligation | Notional Value | Annual | Termination | Unrealized | |||||||||||||
Protection Purchased: ITRAXX Europe | ||||||||||||||||||
BCLY | Crossover 21.1 5 yr CDS | EUR 12,915,000 | 5.00% | 6/20/19 | $ | (134,088 | ) |
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 notional values and foreign currency exchange contracts presented above represent the Fund’s total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Fund’s net assets.
1 | See Note 7 in “Notes to financial statements.” |
2 | A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. |
Summary of abbreviations:
AMT – Subject to Alternative Minimum Tax
ARM – Adjustable Rate Mortgage
AUD – Australian Dollar
BAML – Bank of America Merrill Lynch
BCLY – Barclays Bank
BNP – Banque Paribas
BNYM – Bank of New York Mellon
BRL – Brazilian Real
CAD – Canadian Dollar
CDS – Credit Default Swap
CLP – Chilean Peso
DB – Deutsche Bank
DIP – Debtor in Possession
EUR – European Monetary Unit
GBP – British Pound Sterling
GNMA – Government National Mortgage Association
GSMPS – Goldman Sachs Reperforming Mortgage Securities
HSBC – Hong Kong Shanghai Bank
IDR – Indonesian Rupiah
INR – Indian Rupee
JPMC – JPMorgan Chase Bank
JPY – Japanese Yen
48
Summary of Abbreviations (continued):
KRW – South Korean Won
MASTR – Mortgage Asset Securitization Transactions, Inc.
MSC – Morgan Stanley Capital
MXN – Mexican Peso
NCUA – National Credit Union Administration
NOK – Norwegian Krone
NZD – New Zealand Dollar
PIK – Pay-in-kind
PLN – Polish Zloty
RASC – Residential Asset Securities Corporation
REMIC – Real Estate Mortgage Investment Conduit
SEK – Swedish Krona
S.F. – Single Family
TBA – To be announced
TD – Toronto Dominion Securities
TRY – Turkish Lira
UBS – Union Bank of Switzerland
USD – United States Dollar
See accompanying notes, which are an integral part of the financial statements.
49
Statement of assets and liabilities
Delaware Diversified Income Fund | April 30, 2014 (Unaudited) |
Assets: | ||||||||
Investments, at value1,2 | $ | 5,535,492,525 | ||||||
Short-term investments, at value3 | 419,827,531 | |||||||
Short-term investments held as collateral for loaned securities, at value4 | 157,267,778 | |||||||
Foreign currencies, at value5 | 6,640,063 | |||||||
Cash collateral for derivatives | 2,491,323 | |||||||
Cash | 2,390,420 | |||||||
Receivable for securities sold | 201,151,014 | |||||||
Dividends and interest receivable | 52,892,210 | |||||||
Receivable for fund shares sold | 7,350,398 | |||||||
Variation margin due from broker on futures contracts | 268,990 | |||||||
Securities lending income receivable | 93,893 | |||||||
Unrealized gain on foreign currency exchange contracts | 61,817 | |||||||
|
| |||||||
Total assets | 6,385,927,962 | |||||||
|
| |||||||
Liabilities: | ||||||||
Payable for securities purchased | 487,896,701 | |||||||
Obligation to return securities lending collateral | 157,267,778 | |||||||
Payable for fund shares redeemed | 11,539,223 | |||||||
Income distribution payable | 4,980,504 | |||||||
Annual protection payments on credit default swap contracts | 103,997 | |||||||
Other accrued expenses | 2,269,492 | |||||||
Investment management fees payable | 2,117,425 | |||||||
Distribution fees payable | 1,656,171 | |||||||
Other affiliates payable | 272,754 | |||||||
Trustees’ fees and expenses payable | 14,599 | |||||||
Upfront payments paid on credit default swap contracts | 1,713,514 | |||||||
Unrealized loss on foreign currency exchange contracts | 353,453 | |||||||
Unrealized loss on credit default swap contracts | 134,088 | |||||||
|
| |||||||
Total liabilities | 670,319,699 | |||||||
|
| |||||||
Total Net Assets | $ | 5,715,608,263 | ||||||
|
| |||||||
1Investments, at cost | $ | 5,358,083,444 | ||||||
2Including securities on loan | 148,758,655 | |||||||
3Short-term investments, at cost | 419,827,466 | |||||||
4Short-term investments held as collateral for loaned securities, at cost | 157,267,778 | |||||||
5Foreign currencies, at cost | 6,586,417 |
50
Net Assets Consist of: | ||||
Paid-in capital | $ | 5,622,701,659 | ||
Distributions in excess of net investment income | (26,835,810 | ) | ||
Accumulated net realized loss | (57,965,885 | ) | ||
Net unrealized appreciation of investments and derivatives | 177,708,299 | |||
|
| |||
Total Net Assets | $ | 5,715,608,263 | ||
|
| |||
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 2,800,117,007 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 308,932,806 | |||
Net asset value per share | $ | 9.06 | ||
Sales charge | 4.50 | % | ||
Offering price per share, equal to net asset value per share/(1 – sales charge) | $ | 9.49 | ||
Class B: | ||||
Net assets | $ | 5,843,602 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 645,779 | |||
Net asset value per share | $ | 9.05 | ||
Class C: | ||||
Net assets | $ | 1,242,267,933 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 137,072,384 | |||
Net asset value per share | $ | 9.06 | ||
Class R: | ||||
Net assets | $ | 118,904,562 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 13,125,342 | |||
Net asset value per share | $ | 9.06 | ||
Institutional Class: | ||||
Net assets | $ | 1,548,475,159 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 170,719,808 | |||
Net asset value per share | $ | 9.07 |
See accompanying notes, which are an integral part of the financial statements.
51
Statement of operations
Delaware Diversified Income Fund | Six months ended April 30, 2014 (Unaudited) |
Investment Income: | ||||
Interest | $ | 126,839,794 | ||
Dividends | 2,323,408 | |||
Securities lending income | 512,379 | |||
|
| |||
129,675,581 | ||||
|
| |||
Expenses: | ||||
Management fees | 13,273,730 | |||
Distribution expenses — Class A | 3,642,149 | |||
Distribution expenses — Class B | 37,533 | |||
Distribution expenses — Class C | 6,565,984 | |||
Distribution expenses — Class R | 300,418 | |||
Dividend disbursing and transfer agent fees and expenses | 4,392,003 | |||
Accounting and administration expenses | 1,054,672 | |||
Reports and statements to shareholders | 268,741 | |||
Legal fees | 234,470 | |||
Trustees’ fees and expenses | 158,970 | |||
Custodian fees | 155,620 | |||
Registration fees | 131,368 | |||
Audit and tax | 22,724 | |||
Other | 141,748 | |||
|
| |||
30,380,130 | ||||
Less waived distribution expenses — Class B | (3,639 | ) | ||
Less expense paid indirectly | (2,107 | ) | ||
|
| |||
Total operating expenses | 30,374,384 | |||
|
| |||
Net Investment Income | 99,301,197 | |||
|
|
52
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments* | 23,983,284 | |||
Foreign currencies | (15,250,778 | ) | ||
Foreign currency exchange contracts | (1,109,720 | ) | ||
Futures contracts | 9,261,802 | |||
Swap contracts | (371,878 | ) | ||
|
| |||
Net realized gain | 16,512,710 | |||
|
| |||
Net change in unrealized appreciation (depreciation) of: | ||||
Investments | 54,305,120 | |||
Foreign currencies | 176,442 | |||
Foreign currency exchange contracts | 534,992 | |||
Futures contracts | 1,084,133 | |||
Swap contracts | (206,533 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | 55,894,154 | |||
|
| |||
Net Realized and Unrealized Gain | 72,406,864 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 171,708,061 | ||
|
|
* | Includes $15,996 capital gain taxes. |
See accompanying notes, which are an integral part of the financial statements.
53
Statements of changes in net assets
Delaware Diversified Income Fund
Six months ended 4/30/14 (Unaudited) | Year ended 10/31/13 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 99,301,197 | $ | 247,984,321 | ||||
Net realized gain (loss) | 16,512,710 | (30,715,964 | ) | |||||
Net change in unrealized appreciation (depreciation) | 55,894,154 | (317,703,648 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 171,708,061 | (100,435,291 | ) | |||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (56,870,416 | ) | (113,401,573 | ) | ||||
Class B | (121,283 | ) | (325,601 | ) | ||||
Class C | (20,723,441 | ) | (41,424,219 | ) | ||||
Class R | (2,191,860 | ) | (3,628,912 | ) | ||||
Institutional Class | (32,743,813 | ) | (63,836,683 | ) | ||||
Net realized gain: | ||||||||
Class A | — | (44,853,987 | ) | |||||
Class B | — | (179,929 | ) | |||||
Class C | — | (20,830,889 | ) | |||||
Class R | — | (1,508,898 | ) | |||||
Institutional Class | — | (22,333,841 | ) | |||||
Return of capital: | ||||||||
Class A | — | (37,093,319 | ) | |||||
Class B | — | (107,045 | ) | |||||
Class C | — | (13,596,818 | ) | |||||
Class R | — | (1,187,785 | ) | |||||
Institutional Class | — | (20,849,919 | ) | |||||
|
|
|
| |||||
(112,650,813 | ) | (385,159,418 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 212,450,001 | 889,060,120 | ||||||
Class B | 10,530 | 48,967 | ||||||
Class C | 35,160,060 | 174,308,080 | ||||||
Class R | 18,396,324 | 51,152,003 | ||||||
Institutional Class | 252,236,143 | 977,466,627 |
54
Six months ended 4/30/14 (Unaudited) | Year ended 10/31/13 | |||||||
Capital Share Transactions (continued): | ||||||||
Net asset value of shares based upon reinvestment of dividends and distributions: | ||||||||
Class A | $ | 55,744,765 | $ | 188,583,462 | ||||
Class B | 112,673 | 564,306 | ||||||
Class C | 18,935,660 | 53,114,891 | ||||||
Class R | 2,191,860 | 6,130,292 | ||||||
Institutional Class | 30,218,001 | 94,270,920 | ||||||
|
|
|
| |||||
625,456,017 | 2,434,699,668 | |||||||
|
|
|
| |||||
Cost of shares redeemed: | ||||||||
Class A | (741,791,610 | ) | (2,484,540,885 | ) | ||||
Class B | (3,780,785 | ) | (12,268,441 | ) | ||||
Class C | (296,326,966 | ) | (875,859,568 | ) | ||||
Class R | (27,565,963 | ) | (85,464,560 | ) | ||||
Institutional Class | (487,474,026 | ) | (1,445,552,892 | ) | ||||
|
|
|
| |||||
(1,556,939,350 | ) | (4,903,686,346 | ) | |||||
|
|
|
| |||||
Decrease in net assets derived from capital share transactions | (931,483,333 | ) | (2,468,986,678 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets | (872,426,085 | ) | (2,954,581,387 | ) | ||||
Net Assets: | ||||||||
Beginning of year | 6,588,034,348 | 9,542,615,735 | ||||||
|
|
|
| |||||
End of year (including distributions in excess of net investment income of $26,835,810 and $13,486,194, respectively) | $ | 5,715,608,263 | $ | 6,588,034,348 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
55
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 |
Return of capital |
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 portfolio turnover and total return have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the distributor. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
56
Six months ended | Year ended | |||||||||||||||||||||||||||||||||
4/30/141 | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | |||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
$ | 8.960 | $ | 9.450 | $ | 9.330 | $ | 9.770 | $ | 9.270 | $ | 7.740 | |||||||||||||||||||||||
0.154 | 0.278 | 0.304 | 0.359 | 0.444 | 0.500 | |||||||||||||||||||||||||||||
0.119 | (0.350 | ) | 0.396 | (0.033 | ) | 0.598 | 1.611 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
0.273 | (0.072 | ) | 0.700 | 0.326 | 1.042 | 2.111 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.173 | ) | (0.248 | ) | (0.346 | ) | (0.399 | ) | (0.474 | ) | (0.581 | ) | |||||||||||||||||||||||
— | (0.089 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | |||||||||||||||||||||||||
— | (0.081 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.173 | ) | (0.418 | ) | (0.580 | ) | (0.766 | ) | (0.542 | ) | (0.581 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
$ | 9.060 | $ | 8.960 | $ | 9.450 | $ | 9.330 | $ | 9.770 | $ | 9.270 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
2.97% | (0.66% | ) | 7.82% | 3.64% | 11.60% | 28.42% | ||||||||||||||||||||||||||||
$ | 2,800,117 | $ | 3,244,801 | $ | 4,890,056 | $ | 4,370,224 | $ | 4,423,278 | $ | 3,658,355 | |||||||||||||||||||||||
0.92% | 0.90% | 0.90% | 0.92% | 0.93% | 0.97% | |||||||||||||||||||||||||||||
0.92% | 0.95% | 0.95% | 0.97% | 0.98% | 1.02% | |||||||||||||||||||||||||||||
3.46% | 3.03% | 3.26% | 3.84% | 4.68% | 5.96% | |||||||||||||||||||||||||||||
3.46% | 2.98% | 3.21% | 3.79% | 4.63% | 5.91% | |||||||||||||||||||||||||||||
91% | 238% | 238% | 237% | 232% | 213% | |||||||||||||||||||||||||||||
|
57
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 |
Return of capital |
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 portfolio turnover and total return have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the distributor. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
58
Six months ended | Year ended | |||||||||||||||||||||||||||||||||
4/30/141 | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | |||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
$ | 8.950 | $ | 9.440 | $ | 9.320 | $ | 9.750 | $ | 9.260 | $ | 7.730 | |||||||||||||||||||||||
0.124 | 0.210 | 0.233 | 0.288 | 0.372 | 0.438 | |||||||||||||||||||||||||||||
0.121 | (0.351 | ) | 0.397 | (0.022 | ) | 0.589 | 1.610 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
0.245 | (0.141 | ) | 0.630 | 0.266 | 0.961 | 2.048 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.145 | ) | (0.196 | ) | (0.276 | ) | (0.329 | ) | (0.403 | ) | (0.518 | ) | |||||||||||||||||||||||
— | (0.089 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | |||||||||||||||||||||||||
— | (0.064 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.145 | ) | (0.349 | ) | (0.510 | ) | (0.696 | ) | (0.471 | ) | (0.518 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
$ | 9.050 | $ | 8.950 | $ | 9.440 | $ | 9.320 | $ | 9.750 | $ | 9.260 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
2.77% | (1.52% | ) | 7.02% | 2.98% | 10.78% | 27.51% | ||||||||||||||||||||||||||||
$ | 5,844 | $ | 9,442 | $ | 21,974 | $ | 31,451 | $ | 45,741 | $ | 50,608 | |||||||||||||||||||||||
1.57% | 1.65% | 1.65% | 1.67% | 1.68% | 1.72% | |||||||||||||||||||||||||||||
1.67% | 1.65% | 1.65% | 1.67% | 1.68% | 1.72% | |||||||||||||||||||||||||||||
2.81% | 2.28% | 2.51% | 3.09% | 3.93% | 5.21% | |||||||||||||||||||||||||||||
2.71% | 2.28% | 2.51% | 3.09% | 3.93% | 5.21% | |||||||||||||||||||||||||||||
91% | 238% | 238% | 237% | 232% | 213% | |||||||||||||||||||||||||||||
|
59
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 |
Return of capital |
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 portfolio turnover and total return 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.
60
Six months ended 4/30/141 (Unaudited) | Year ended | |||||||||||||||||||||||||||||||||
10/31/13
| 10/31/12
| 10/31/11
| 10/31/10
| 10/31/09
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
$ | 8.960 | $ | 9.450 | $ | 9.330 | $ | 9.760 | $ | 9.270 | $ | 7.740 | |||||||||||||||||||||||
0.120 | 0.209 | 0.234 | 0.289 | 0.373 | 0.437 | |||||||||||||||||||||||||||||
0.120 | (0.349 | ) | 0.397 | (0.023 | ) | 0.588 | 1.611 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
0.240 | (0.140 | ) | 0.631 | 0.266 | 0.961 | 2.048 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.140 | ) | (0.197 | ) | (0.277 | ) | (0.329 | ) | (0.403 | ) | (0.518 | ) | |||||||||||||||||||||||
— | (0.089 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | |||||||||||||||||||||||||
— | (0.064 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.140 | ) | (0.350 | ) | (0.511 | ) | (0.696 | ) | (0.471 | ) | (0.518 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
$ | 9.060 | $ | 8.960 | $ | 9.450 | $ | 9.330 | $ | 9.760 | $ | 9.270 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
2.71% | (1.51% | ) | 7.01% | 2.98% | 10.65% | 27.47% | ||||||||||||||||||||||||||||
$ | 1,242,268 | $ | 1,471,553 | $ | 2,230,985 | $ | 2,012,603 | $ | 2,097,340 | $ | 1,375,429 | |||||||||||||||||||||||
1.67% | 1.65% | 1.65% | 1.67% | 1.68% | 1.72% | |||||||||||||||||||||||||||||
2.71% | 2.28% | 2.51% | 3.09% | 3.93% | 5.21% | |||||||||||||||||||||||||||||
91% | 238% | 238% | 237% | 232% | 213% | |||||||||||||||||||||||||||||
|
61
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 |
Return of capital |
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 portfolio turnover and total return have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during some of the periods shown reflects a waiver by the distributor. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
62
Six months ended 4/30/141 (Unaudited) | Year ended | |||||||||||||||||||||||||||||||||
10/31/13
| 10/31/12
| 10/31/11
| 10/31/10
| 10/31/09
| ||||||||||||||||||||||||||||||
$ | 8.960 | $ | 9.450 | $ | 9.330 | $ | 9.760 | $ | 9.270 | $ | 7.730 | |||||||||||||||||||||||
0.142 | 0.255 | 0.280 | 0.336 | 0.420 | 0.479 | |||||||||||||||||||||||||||||
0.120 | (0.350 | ) | 0.397 | (0.023 | ) | 0.589 | 1.621 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
0.262 | (0.095 | ) | 0.677 | 0.313 | 1.009 | 2.100 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.162 | ) | (0.231 | ) | (0.323 | ) | (0.376 | ) | (0.451 | ) | (0.560 | ) | |||||||||||||||||||||||
— | (0.089 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | |||||||||||||||||||||||||
— | (0.075 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.162 | ) | (0.395 | ) | (0.557 | ) | (0.743 | ) | (0.519 | ) | (0.560 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
$ | 9.060 | $ | 8.960 | $ | 9.450 | $ | 9.330 | $ | 9.760 | $ | 9.270 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
2.96% | (1.02% | ) | 7.55% | 3.49% | 11.33% | 28.27% | ||||||||||||||||||||||||||||
$ | 118,904 | $ | 124,586 | $ | 160,695 | $ | 146,620 | $ | 172,642 | $ | 137,179 | |||||||||||||||||||||||
1.17% | 1.15% | 1.15% | 1.17% | 1.18% | 1.22% | |||||||||||||||||||||||||||||
1.17% | 1.24% | 1.25% | 1.27% | 1.28% | 1.32% | |||||||||||||||||||||||||||||
3.21% | 2.78% | 3.01% | 3.59% | 4.43% | 5.71% | |||||||||||||||||||||||||||||
3.21% | 2.69% | 2.91% | 3.49% | 4.33% | 5.61% | |||||||||||||||||||||||||||||
91% | 238% | 238% | 237% | 232% | 213% | |||||||||||||||||||||||||||||
|
63
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 |
Return of capital |
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 portfolio turnover and total return 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.
64
Six months ended 4/30/141 (Unaudited) | Year ended | |||||||||||||||||||||||||||||||||
10/31/13
| 10/31/12
| 10/31/11
| 10/31/10
| 10/31/09
| ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||
$ | 8.970 | $ | 9.460 | $ | 9.340 | $ | 9.770 | $ | 9.280 | $ | 7.740 | |||||||||||||||||||||||
0.165 | 0.301 | 0.327 | 0.383 | 0.470 | 0.521 | |||||||||||||||||||||||||||||
0.120 | (0.350 | ) | 0.397 | (0.023 | ) | 0.586 | 1.621 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
0.285 | (0.049 | ) | 0.724 | 0.360 | 1.056 | 2.142 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.185 | ) | (0.265 | ) | (0.370 | ) | (0.423 | ) | (0.498 | ) | (0.602 | ) | |||||||||||||||||||||||
— | (0.089 | ) | (0.234 | ) | (0.367 | ) | (0.068 | ) | — | |||||||||||||||||||||||||
— | (0.087 | ) | — | — | — | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
(0.185 | ) | (0.441 | ) | (0.604 | ) | (0.790 | ) | (0.566 | ) | (0.602 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
$ | 9.070 | $ | 8.970 | $ | 9.460 | $ | 9.340 | $ | 9.770 | $ | 9.280 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
3.21% | (0.52% | ) | 8.08% | 4.01% | 11.76% | 28.87% | ||||||||||||||||||||||||||||
$ | 1,548,475 | $ | 1,737,652 | $ | 2,238,906 | $ | 1,620,249 | $ | 1,242,001 | $ | 323,134 | |||||||||||||||||||||||
0.67% | 0.65% | 0.65% | 0.67% | 0.68% | 0.72% | |||||||||||||||||||||||||||||
3.71% | 3.28% | 3.51% | 4.09% | 4.93% | 6.21% | |||||||||||||||||||||||||||||
91% | 238% | 238% | 237% | 232% | 213% | |||||||||||||||||||||||||||||
|
67
Notes to financial statements | ||
Delaware Diversified Income Fund | April 30, 2014 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities 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 1.00%, if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4.00% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1.00%, if redeemed during the first 12 months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek 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 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. 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. 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. For asset-backed securities, collateralized mortgage obligations, commercial mortgage securities, and U.S. government agency mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity, and type as well as broker/dealer-supplied prices. Swap prices are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Open end investment company securities are valued at net asset value per share, as reported by the underlying investment company. Foreign currency exchange contracts and foreign cross currency exchange contracts are valued at the mean between the bid and ask prices, which approximates fair value.
66
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 contracts are valued at the daily quoted settlement prices. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices, which approximates fair value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal and Foreign Income Taxes – No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2010–Oct. 31, 2013), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
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 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, 2014.
67
Notes to financial statements
Delaware Diversified Income Fund
1. Significant Accounting Policies (continued)
To Be Announced Trades (TBA) – The Fund may contract to purchase or sell 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 or deliver 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 gain (loss) on foreign currencies. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are amortized to interest income over the lives of the respective securities using the effective interest method. 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 may pay foreign capital gain taxes on certain foreign securities held, which are reported as components of realized losses for financial reporting purposes, whereas such components are treated as ordinary loss for federal income tax purposes. The Fund declares dividends daily from net investment income and pays the dividends monthly and declares and pays distributions from net realized gain on investments, if
68
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 may be used to offset custody fees. There were no earnings credits for the six months ended April 30, 2014.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than one dollar, the expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses and appears on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2014, the Fund earned $2,107 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 0.55% 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 six months ended April 30, 2014, the Fund was charged $142,921 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets of the retail funds within the Delaware Investments Family of Funds at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% of average daily net assets in excess of $30 billion. This amount is included in the statement of operations as dividend disbursing and transfer agent fees and expenses. For the six months ended April 30, 2014, the amount charged by DSC was $651,221. 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 fees 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 B and C shares, and 0.50% of the average daily net assets of the Class R shares. Institutional Class shares pay no distribution and service expenses. DDLP has contracted to waive Class B shares’ 12b-1 fees from April 1, 2014 through
69
Notes to financial statements
Delaware Diversified Income Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued)
March 31, 2015 to 0.25% of the average daily net assets. This waiver may only be terminated by agreement of the Distributor and the Fund.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliated that provide legal, tax, and regulatory services to the Fund. For the six months ended April 30, 2014, the Fund was charged $91,977 for internal legal, tax, and regulatory services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2014, DDLP earned $28,256 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2014, DDLP received gross CDSC commissions of $1,334, $0, and $3,930 on redemptions of the Fund’s Class A, Class B, and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
3. Investments
For the six months ended April 30, 2014, the Fund made purchases of $4,273,436,245 and sales of $5,492,546,478 of investment securities other than U.S. government securities and short-term investments. For the six months ended April 30, 2014, the Fund made purchases of $1,074,236,033 and sales of $869,181,559 of long-term U.S. government securities.
At April 30, 2014, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2014, the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments | $ | 5,969,147,161 | ||
|
| |||
Aggregate unrealized appreciation | $ | 179,322,709 | ||
Aggregate unrealized depreciation | (35,882,036 | ) | ||
|
| |||
Net unrealized appreciation | $ | 143,440,673 | ||
|
|
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. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses.
70
Losses incurred that will be carried forward under the Act are as follows:
Loss carryforward character |
| |||
Short-term | Long-term | |||
$35,118,418 | $ | — |
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.
71
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, 2014:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Agency, Asset & Mortgage-Backed Securities1 | $ | — | $ | 1,088,188,598 | $ | 3,687,253 | $ | 1,091,875,851 | ||||||||
Corporate Debt | — | 3,343,574,330 | — | 3,343,574,330 | ||||||||||||
Municipal Bonds | — | 35,568,153 | — | 35,568,153 | ||||||||||||
Foreign Debt1 | — | 121,549,834 | 8,169,303 | 129,719,137 | ||||||||||||
Senior Secured Loans | — | 622,373,894 | — | 622,373,894 | ||||||||||||
U.S. Treasury Obligations | — | 248,993,006 | — | 248,993,006 | ||||||||||||
Common Stock | — | — | — | — | ||||||||||||
Convertible Preferred Stock1 | 13,428,070 | 14,707,796 | — | 28,135,866 | ||||||||||||
Preferred Stock1 | 25,477,689 | 9,774,583 | — | 35,252,272 | ||||||||||||
Options Purchased | — | 16 | — | 16 | ||||||||||||
Short-Term Investments | — | 419,827,531 | — | 419,827,531 | ||||||||||||
Securities Lending Collateral | — | 157,267,778 | — | 157,267,778 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 38,905,759 | $ | 6,061,825,519 | $ | 11,856,556 | $ | 6,112,587,834 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Foreign Currency Exchange Contracts | $ | — | $ | (291,636 | ) | $ | — | $ | (291,636 | ) | ||||||
Futures Contracts | 621,701 | — | — | 621,701 | ||||||||||||
Swap Contracts | — | (134,088 | ) | — | (134,088 | ) | ||||||||||
1Security type is valued across multiple levels. Level 1 investments represent exchange-traded investments, Level 2 investments represent investments with observable input or matrix-price investments, and Level 3 investments represent investments without observable inputs. The amounts attributed to Level 1 investments, Level 2 investments, and Level 3 investments represent the following percentages of the total market value of these security types: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Agency, Asset- & Mortgage-Backed Securities | — | 99.66 | % | 0.34 | % | 100.00 | % | |||||||||
Foreign Debt | — | 93.70 | % | 6.30 | % | 100.00 | % | |||||||||
Convertible Preferred Stock | 47.73 | % | 52.27 | % | — | 100.00 | % | |||||||||
Preferred Stock | 72.27 | % | 27.73 | % | — | 100.00 | % |
During the six months ended April 30, 2014, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a significant impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. 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.
72
4. Capital Shares
Transactions in capital shares were as follows:
Six months 4/30/14 | Year ended 10/31/13 | |||||||
Shares sold: | ||||||||
Class A | 23,703,898 | 96,364,829 | ||||||
Class B | 1,171 | 5,288 | ||||||
Class C | 3,918,481 | 18,780,252 | ||||||
Class R | 2,055,266 | 5,561,330 | ||||||
Institutional Class | 28,131,816 | 105,812,619 | ||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 6,219,264 | 20,512,652 | ||||||
Class B | 12,601 | 61,303 | ||||||
Class C | 2,112,588 | 5,787,536 | ||||||
Class R | 245,044 | 667,773 | ||||||
Institutional Class | 3,369,145 | 10,266,953 | ||||||
|
|
|
| |||||
69,769,274 | 263,820,535 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (82,938,646 | ) | (272,143,771 | ) | ||||
Class B | (422,941 | ) | (1,339,486 | ) | ||||
Class C | (33,125,492 | ) | (96,397,088 | ) | ||||
Class R | (3,079,299 | ) | (9,329,920 | ) | ||||
Institutional Class | (54,475,170 | ) | (159,031,102 | ) | ||||
|
|
|
| |||||
(174,041,548 | ) | (538,241,367 | ) | |||||
|
|
|
| |||||
Net decrease | (104,272,274 | ) | (274,420,832 | ) | ||||
|
|
|
|
For the six months ended April 30, 2014 and the year ended Oct. 31, 2013, 53,448 Class B shares were converted to 53,455 Class A shares valued at $480,330, and 162,021 Class B shares were converted to 161,950 Class A shares valued at $1,492,498, respectively. The respective amounts are included in Class B redemptions and Class A subscriptions in the table above and the statements of changes in net assets.
5. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), 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 of 0.08%, 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
73
Notes to financial statements
Delaware Diversified Income Fund
5. Line of Credit (continued)
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. 12, 2013.
On Nov. 12, 2013, the Fund, along with the other Participants, entered into an amendment to the agreement for a $225,000,000 revolving line of credit. The line of credit 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 will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of April 30, 2014 or at any time during the period then ended.
6. Unfunded Commitments
The Fund may invest in floating rate loans. In connection with these investments, the Fund may also enter into unfunded corporate loan commitments (commitments). Commitments may obligate the Fund to furnish temporary financing to a borrower until permanent financing can be arranged. In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount. As of April 30, 2014, the Fund had the following unfunded loan commitment:
Borrower | ||||
Ortho-Clinical Bridge Loan | $ | 1,915,000 | ||
Polymer Group Bridge Loan | �� | 2,834,100 |
7. Derivatives
U.S. GAAP requires disclosures that enable investors to understand: (1) how and why an entity uses derivatives; (2) how they are accounted for; and (3) how they affect an entity’s results of operations and financial position.
Foreign Currency Exchange Contracts – The Fund may enter into foreign currency exchange contracts and foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the 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. In addition, the Fund may enter into these contracts to facilitate or expedite the settlement of portfolio transactions. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts and foreign cross currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having
74
a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.
During the six months ended April 30, 2014, the Fund used foreign currency exchange contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies.
Futures Contracts – A futures contract is an agreement in which the writer (or seller) of the contract agrees to deliver to the buyer an amount of cash or securities equal to a specific dollar amount times the difference between the value of a specific security or index at the close of the last trading day of the contract and the price at which the agreement is made. The Fund may use futures in the normal course of pursuing its investment objective. The Fund may invest in futures contracts to hedge its existing portfolio securities against fluctuations in fair value caused by changes in interest rates, or market conditions. 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.
During the six months ended April 30, 2014, the Fund used futures contracts to hedge the Fund’s existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions.
Options Contracts – During the six months ended April 30, 2014, the Fund entered into options contracts in the normal course of pursuing its investment objective. The Fund may buy or write options contracts for any number of reasons, including without limitation: to manage the Fund’s exposure to changes in securities prices caused by interest rates or market conditions and foreign currencies; as an efficient means of adjusting the Fund’s overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, futures, swaps, swaptions, financial indices, and foreign currencies. When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of the option purchased. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the
75
Notes to financial statements
Delaware Diversified Income Fund
7. Derivatives (continued)
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, 2014, the Fund used option contracts to adjust the Fund’s overall exposure to certain markets. During the six months ended April 30, 2014, the Fund did not enter into any written option contracts.
Swap Contracts – The Fund may enter into interest rate swap contracts and CDS contracts in the normal course of pursuing its investment objective. The Fund may invest in interest rate swaps to manage 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. The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty, combined with any credit enhancements, is rated at least BBB- by Standard & Poor’s Financial Services LLC. (S&P) or Baa3 by Moody’s Investors Service (Moody’s) or is determined to be of equivalent credit quality by DMC.
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 (1) having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty for trades entered prior to June 10, 2013, and (2) trading these instruments through a central counterparty for trades entered on or after June 10, 2013.
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
76
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, 2014, the Fund entered into CDS contracts as a purchaser of protection in order to gain exposure to certain securities or markets, and as a seller of protection in order to hedge against a credit event. 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. Initial margin and variation margin is posted to central counterparties for CDS basket trades submitted on or after June 10, 2013, as determined by the applicable central counterparty. The Fund posted $2,451,323 in cash collateral for centrally cleared swap contracts, which is presented as cash collateral for derivatives on the statement of assets and liabilities.
CDS contracts may involve greater risks than if the Fund had invested in the reference obligation directly. CDS contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Fund’s maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by (1) having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty for trades entered prior to June 10, 2013 and (2) trading CDS basket through a central counterparty for trades entered on or after June 10, 2013.
During the six months ended April 30, 2014, the Fund used CDS contracts to hedge against a credit event and to protect against currency fluctuations.
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 schedule of investments.
77
Notes to financial statements
Delaware Diversified Income Fund
7. Derivatives (continued)
Fair values of derivative instruments as of April 30, 2014 were as follows:
Asset Derivatives | Liability Derivatives | |||||||
Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | |||||
Forward currency exchange contracts (Foreign currency exchange contracts) | Unrealized gain on foreign currency exchange contracts | $61,817 | Unrealized loss on foreign currency exchange contracts | $353,453 | ||||
Interest rate contracts (Futures contracts) | Variation margin receivable on futures contracts | 754,440* | Variation margin payable on futures contracts | 132,739* | ||||
Credit contracts (Swap contracts) | Unrealized gain on credit default swap contracts | — | Unrealized loss on credit default swap contracts | 134,088 | ||||
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| |||||||
Total | $816,257 | $620,280 | ||||||
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|
*Includes cumulative appreciation of futures contracts from the date the contracts are opened through April 30, 2014. Only current day variation margin is reported on the Fund’s statement of assets and liabilities.
The effect of derivative instruments on the statement of operations for the six months ended April 30, 2014 was as follows:
Net Realized Gain (Loss) on: | ||||||||||||||||
| Foreign Currency Exchange Contracts | | | Futures Contracts | | | Swap Contracts | | Total | |||||||
Forward currency exchange contracts | $ | (1,109,720 | ) | $ | — | $ | — | $ | (1,109,720 | ) | ||||||
Interest rate contracts | — | 9,261,802 | — | 9,261,802 | ||||||||||||
Credit contracts | — | — | (371,878 | ) | (371,878 | ) | ||||||||||
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| |||||||||
Total | $ | (1,109,720 | ) | $ | 9,261,802 | $ | (371,878 | ) | $ | 7,780,204 | ||||||
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| |||||||||
Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||||||||||
| Foreign Currency Exchange Contracts | | | Futures Contracts | | | Swap Contracts | | Total | |||||||
Forward currency exchange contracts | $ | 534,992 | $ | — | $ | — | $ | 534,992 | ||||||||
Interest rate contracts | — | 1,084,133 | — | 1,084,133 | ||||||||||||
Credit contracts | — | — | (206,533 | ) | (206,533 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 534,992 | $ | 1,084,133 | $ | (206,533 | ) | $ | 1,412,592 | |||||||
|
|
|
|
|
|
|
|
78
Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended April 30, 2014.
Long Derivative Volume | Short Derivative Volume | |||||||||||
Foreign currency exchange contracts (average cost) | USD | 59,573,075 | USD 150,168,169 | |||||||||
Futures contracts (average notional value) | 313,423,231 | 345,784,078 | ||||||||||
Options contracts (average notional value) | 61,624 | — | ||||||||||
CDS contracts (average notional value)* | EUR | 315,000 | — | |||||||||
USD | 21,708,374 | — |
*Long represents buying protection and short represents selling protection.
8. Offsetting
In December 2011, the Financial Accounting Standards Board (FASB) issued guidance that expands current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures are required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the statements of assets and liabilities and will require an entity to disclose both gross and net information about such investments and transactions in the financial statements. In January 2013, the FASB issued guidance that clarifies which investments and transactions are subject to the offsetting disclosure requirements. The scope of the disclosure requirements for offsetting is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance is effective for financial statements with fiscal years beginning on or after Jan. 1, 2013, and interim periods within those fiscal years. The Fund adopted the disclosure provisions on offsetting during the current reporting period.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with their derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs over-the-counter (OTC) derivatives and foreign exchange contracts and typically contains, among other things, collateral posting items and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) netting including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
79
Notes to financial statements
Delaware Diversified Income Fund
At April 30, 2014, the Fund had the following assets and liabilities subject to offsetting provisions:
Offsetting of Financial Assets and Liabilities and Derivative Assets and Liabilities
Counterparty | Gross Value of Derivative Asset | Gross Value of Derivative Liability | Net Position | |||||||||
Bank of America Merrill Lynch | $ | 15,607 | $ | (25,011 | ) | $ | (9,404 | ) | ||||
Barclays Bank | 5,880 | (134,088 | ) | (128,208 | ) | |||||||
BNP Paribas | 32,313 | — | 32,313 | |||||||||
BNY Mellon | 148,758,655 | (990 | ) | 148,757,665 | ||||||||
JPMorgan Chase Bank | 7,771 | (111,725 | ) | (103,954 | ) | |||||||
Morgan Stanley Capital | 246 | (84,159 | ) | (83,913 | ) | |||||||
Toronto Dominion Bank | — | (94,352 | ) | (94,352 | ) | |||||||
Union Bank of Switzerland | — | (37,216 | ) | (37,216 | ) | |||||||
|
|
|
|
|
| |||||||
Total | $ | 148,820,472 | $ | (487,541 | ) | $ | 148,332,931 | |||||
|
|
|
|
|
|
Counterparty | Net Position | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Fair Value of Non-Cash Collateral Pledged | Cash Collateral Pledged | Net Amount(a) | ||||||||||||||||||||||||
Bank of America Merrill Lynch | $ | (9,404 | ) | $ | — | $ | — | $ | — | $ | — | $ | (9,404 | ) | ||||||||||||||||
Barclays Bank | (128,208 | ) | — | — | 40,000 | — | (88,208 | ) | ||||||||||||||||||||||
BNP Paribas | 32,313 | — | — | — | — | 32,313 | ||||||||||||||||||||||||
BNY Mellon | 148,757,665 | — | (148,758,655 | ) | — | — | (990 | ) | ||||||||||||||||||||||
JPMorgan Chase Bank | (103,954 | ) | — | — | — | — | (103,954 | ) | ||||||||||||||||||||||
Morgan Stanley Capital | (83,913 | ) | — | — | — | — | (83,913 | ) | ||||||||||||||||||||||
Toronto Dominion Bank | (94,352 | ) | — | — | — | — | (94,352 | ) | ||||||||||||||||||||||
Union Bank of Switzerland | (37,216 | ) | — | — | — | — | (37,216 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Total | $ | 148,332,931 | $ | — | $ | (148,758,655 | ) | $ | 40,000 | $ | — | $ | (385,724 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Master Repurchase Agreements
Counterparty | Repurchase Agreements | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Net Amount(a) | ||||||||||||||||
Bank of America | ||||||||||||||||||||
Merrill Lynch | $ | 79,963,633 | $ | (79,963,633 | ) | $— | $— | |||||||||||||
Bank of Montreal | 26,654,545 | (26,654,545 | ) | — | — | |||||||||||||||
BNP Paribas | 312,182,822 | (312,182,822 | ) | — | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 418,801,000 | $ | (418,801,000 | ) | $— | $— | |||||||||||||
|
|
|
|
|
|
|
|
(a)Net amount represents the receivable/(payable) that would be due from/(to) the counterparty in the event of default.
80
9. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day may be more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments® Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high-quality corporate debt, asset-backed and other money market securities, and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
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
81
Notes to financial statements
Delaware Diversified Income Fund
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, 2014, the value of securities on loan was $148,758,655, and the value of invested collateral was $157,267,778, for which cash collateral was received and invested in accordance with the Lending Agreement. These investments are presented on the schedule of investments under the caption “Securities Lending Collateral.”
10. Credit and Market Risk
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.
The Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by S&P and Baa3 by Moody’s, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment-grade securities.
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
82
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 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 letters of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC, the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. Rule 144A and illiquid securities have been identified on the schedule of investments.
11. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
12. Subsequent Events
Management has determined that no other material events or transactions occurred subsequent to April 30, 2014 that would require recognition or disclosure in the Fund’s financial statements.
83
About the organization
Board of trustees | ||||||
Patrick P. Coyne | Joseph W. Chow | Lucinda S. Landreth | Thomas K. Whitford | |||
Chairman, President, and Chief Executive Officer Delaware Investments ® Family of Funds Philadelphia, PA
Thomas L. Bennett Private Investor Rosemont, PA
| Former Executive Vice President State Street Corporation Brookline, MA
John A. Fry President Drexel University Philadelphia, PA
| Former Chief Investment Officer Assurant, Inc. Philadelphia, PA
Frances A. Sevilla-Sacasa Chief Executive Officer Banco Itaú International Miami, FL
| Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Janet L. Yeomans Former Vice President and Treasurer 3M Corporation St. Paul, MN
J. Richard Zecher Founder Investor Analytics Scottsdale, AZ
|
Affiliated officers | ||||||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus | |||
Senior Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | Executive Vice President, General Counsel, and Chief Legal Officer Delaware Investments Family of Funds Philadelphia, PA | 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.
84
Semiannual report
U.S. growth equity mutual fund
Delaware U.S. Growth Fund
April 30, 2014
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawareinvestments.com/edelivery.
Experience Delaware Investments
Delaware Investments is committed to the pursuit of consistently superior asset management and unparalleled client service. We believe in our investment processes, which seek to deliver consistent results, and in convenient services that help add value for our clients.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Investments or obtain a prospectus for Delaware 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.
1 | ||||
3 | ||||
5 | ||||
8 | ||||
10 | ||||
11 | ||||
12 | ||||
22 | ||||
32 |
Unless otherwise noted, views expressed herein are current as of April 30, 2014, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2014 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
For the six-month period from November 1, 2013 to April 30, 2014 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2013 to April 30, 2014.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
For the six-month period from November 1, 2013 to April 30, 2014 (Unaudited)
Delaware U.S. Growth Fund
Expense analysis of an investment of $1,000
Beginning
| Ending
| Annualized
| Expenses
| |||||||||||||||||
Actual Fund return† | ||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,065.10 | 1.06 | % | $ | 5.43 | ||||||||||||
Class B | 1,000.00 | 1,064.50 | 1.06 | % | 5.43 | |||||||||||||||
Class C | 1,000.00 | 1,061.00 | 1.81 | % | 9.25 | |||||||||||||||
Class R | 1,000.00 | 1,063.50 | 1.31 | % | 6.70 | |||||||||||||||
Institutional Class | 1,000.00 | 1,066.00 | 0.81 | % | 4.15 | |||||||||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,019.54 | 1.06 | % | $ | 5.31 | ||||||||||||
Class B | 1,000.00 | 1,019.54 | 1.06 | % | 5.31 | |||||||||||||||
Class C | 1,000.00 | 1,015.82 | 1.81 | % | 9.05 | |||||||||||||||
Class R | 1,000.00 | 1,018.30 | 1.31 | % | 6.56 | |||||||||||||||
Institutional Class | 1,000.00 | 1,020.78 | 0.81 | % | 4.06 |
* | “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, 2014 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Security type / sector
| Percentage of net assets
| ||||
Common Stock² | 98.46% | ||||
Consumer Discretionary | 18.65% | ||||
Consumer Staples | 4.96% | ||||
Energy | 6.43% | ||||
Financial Services | 22.55% | ||||
Healthcare | 15.41% | ||||
Materials & Processing. | 1.84% | ||||
Technology | 28.62% | ||||
Short-Term Investments | 1.17% | ||||
Total Value of Securities | 99.63% | ||||
Receivables and Other Assets Net of Liabilities | 0.37% | ||||
Total Net Assets | 100.00% |
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
To monitor compliance with the Fund’s concentration guidelines as described in the Fund’s Prospectus and Statement of Additional Information, the Technology sector (as disclosed herein for financial reporting purposes) is subdivided into a variety of “industries” (in accordance with the requirements of the 1940 Act) such as computers, internet, semiconductors, and software. As of April 30, 2014 such amounts, as percentage of total net assets, were 1.73%, 8.49% 5.28% and 13.12% respectively. The percentage in any such single industry will comply with the Fund’s concentration policy even if the percentage in the “Technology sector” for financial reporting purposes may exceed 25%.
3
Security type / sector allocation and
top 10 equity holdings
Delaware U.S. Growth Fund
Holdings are for informational purposes only and are subject to change at any time. They are not a recommendation to buy, sell, or hold any security.
Top 10 equity holdings
| Percentage of net assets
| ||||
Allergan | 5.40% | ||||
Visa Class A | 5.38% | ||||
QUALCOMM | 5.28% | ||||
MasterCard Class A | 5.20% | ||||
Celgene | 5.14% | ||||
Microsoft | 5.10% | ||||
EOG Resources | 4.97% | ||||
Walgreen | 4.96% | ||||
Crown Castle International | 4.64% | ||||
Liberty Interactive Class A
|
| 4.27%
|
|
4
Delaware U.S. Growth Fund | April 30, 2014 (Unaudited) |
Number of
| Value (U.S. $)
| |||||||||
Common Stock – 98.46%² | ||||||||||
Consumer Discretionary – 18.65% | ||||||||||
eBay † | 2,111,375 | $ | 109,432,566 | |||||||
L Brands | 1,621,700 | 87,896,140 | ||||||||
Liberty Interactive Class A † | 4,355,065 | 126,558,189 | ||||||||
NIKE Class B | 868,300 | 63,342,485 | ||||||||
Priceline Group † | 104,925 | 121,476,919 | ||||||||
Sally Beauty Holdings † | 1,598,273 | 43,808,663 | ||||||||
|
| |||||||||
552,514,962 | ||||||||||
|
| |||||||||
Consumer Staples – 4.96% | ||||||||||
Walgreen | 2,166,825 | 147,127,418 | ||||||||
|
| |||||||||
147,127,418 | ||||||||||
|
| |||||||||
Energy – 6.43% | ||||||||||
EOG Resources | 1,502,925 | 147,286,650 | ||||||||
Kinder Morgan | 1,319,508 | 43,095,131 | ||||||||
|
| |||||||||
190,381,781 | ||||||||||
|
| |||||||||
Financial Services – 22.55% | ||||||||||
CME Group | 811,723 | 57,137,182 | ||||||||
Crown Castle International | 1,888,049 | 137,317,804 | ||||||||
IntercontinentalExchange Group | 430,175 | 87,944,977 | ||||||||
MasterCard Class A | 2,094,850 | 154,076,218 | ||||||||
Progressive | 2,967,764 | 71,968,277 | ||||||||
Visa Class A | 787,200 | 159,494,592 | ||||||||
|
| |||||||||
667,939,050 | ||||||||||
|
| |||||||||
Healthcare – 15.41% | ||||||||||
Allergan | 964,100 | 159,886,344 | ||||||||
Celgene † | 1,035,400 | 152,214,154 | ||||||||
Novo Nordisk ADR | 1,923,725 | 87,317,878 | ||||||||
Perrigo | 393,756 | 57,039,494 | ||||||||
|
| |||||||||
456,457,870 | ||||||||||
|
| |||||||||
Materials & Processing – 1.84% | ||||||||||
Syngenta ADR | 693,275 | 54,456,751 | ||||||||
|
| |||||||||
54,456,751 | ||||||||||
|
| |||||||||
Technology – 28.62% | ||||||||||
Adobe Systems † | 1,910,650 | 117,867,999 | ||||||||
Equinix † | 478,550 | 89,876,475 | ||||||||
Google Class A † | 123,250 | 65,923,960 | ||||||||
Google Class C † | 122,525 | 64,529,017 | ||||||||
Intuit | 1,190,075 | 90,148,181 | ||||||||
Microsoft | 3,738,100 | 151,019,240 | ||||||||
QUALCOMM | 1,987,775 | 156,457,770 | ||||||||
Teradata † | 1,127,050 | 51,235,693 | ||||||||
VeriFone Systems † | 892,100 | 29,831,824 |
5
Schedule of investments
Delaware U.S. Growth Fund
Number of shares
| Value (U.S. $)
| |||||||||
Common Stock² (continued) | ||||||||||
Technology (continued) | ||||||||||
VeriSign † | 72,034 | $ | 3,398,564 | |||||||
Yelp † | 474,500 | 27,672,840 | ||||||||
|
| |||||||||
847,961,563 | ||||||||||
|
| |||||||||
Total Common Stock (cost $2,270,498,864) | 2,916,839,395 | |||||||||
|
| |||||||||
Principal amount° | ||||||||||
Short-Term Investments – 1.17% | ||||||||||
Repurchase Agreements – 1.01% | ||||||||||
Bank of America Merrill Lynch | 5,703,028 | 5,703,028 | ||||||||
Bank of Montreal | 1,901,009 | 1,901,009 | ||||||||
BNP Paribas | 22,264,963 | 22,264,963 | ||||||||
|
| |||||||||
29,869,000 | ||||||||||
|
| |||||||||
U.S. Treasury Obligation – 0.16%≠ | ||||||||||
U.S. Treasury Bill 0.093% 11/13/14 | 4,748,270 | 4,747,173 | ||||||||
|
| |||||||||
4,747,173 | ||||||||||
|
| |||||||||
Total Short-Term Investments (cost $34,614,879) | 34,616,173 | |||||||||
|
| |||||||||
Total Value of Securities – 99.63% | $ | 2,951,455,568 | ||||||||
|
|
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in U.S. dollars unless noted that the security is denominated in another currency. |
† | Non income producing security. |
ADR – American Depositary Receipt
See accompanying notes, which are an integral part of the financial statements.
6
This page intentionally left blank.
Statement of assets and liabilities
Delaware U.S. Growth Fund | April 30, 2014 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 2,916,839,395 | ||
Short-term investments, at value2 | 34,616,173 | |||
Cash | 207,363 | |||
Receivable for fund shares sold | 9,831,199 | |||
Receivable for securities sold | 8,342,833 | |||
Dividends and interest receivable | 998,834 | |||
|
| |||
Total assets | 2,970,835,797 | |||
|
| |||
Liabilities: | ||||
Payable for securities purchased | 3,141,075 | |||
Payable for Fund shares redeemed | 2,735,266 | |||
Investment management fees payable | 1,366,039 | |||
Other accrued expenses | 1,010,949 | |||
Distribution fees payable | 147,530 | |||
Other affiliates payable | 97,964 | |||
Trustees’ fees and expenses payable | 7,503 | |||
|
| |||
Total liabilities | 8,506,326 | |||
|
| |||
Total Net Assets | $ | 2,962,329,471 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 2,300,445,693 | ||
Undistributed net investment income | 7,362,868 | |||
Accumulated net realized gain on investments | 8,179,085 | |||
Net unrealized appreciation of investments | 646,341,825 | |||
|
| |||
Total Net Assets | $ | 2,962,329,471 | ||
|
| |||
1 Investments, at cost | $ | 2,270,498,864 | ||
2 Short-term investments, at cost | 34,614,879 |
8
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 360,259,158 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 15,397,020 | |||
Net asset value per share | $ | 23.40 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 – sales charge) | $ | 24.83 | ||
Class B: | ||||
Net assets | $ | 877,227 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 43,897 | |||
Net asset value per share | $ | 19.98 | ||
Class C: | ||||
Net assets | $ | 79,321,958 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 3,677,485 | |||
Net asset value per share | $ | 21.57 | ||
Class R: | ||||
Net assets | $ | 21,201,314 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 930,310 | |||
Net asset value per share | $ | 22.79 | ||
Institutional Class: | ||||
Net assets | $ | 2,500,669,814 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 100,716,955 | |||
Net asset value per share | $ | 24.83 |
See accompanying notes, which are an integral part of the financial statements.
9
Delaware U.S. Growth Fund | Six months ended April 30, 2014 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 21,105,287 | ||
Interest | 11,710 | |||
Foreign tax withheld | (234,476 | ) | ||
|
| |||
20,882,521 | ||||
|
| |||
Expenses: | ||||
Management fees | 7,989,910 | |||
Distribution expenses – Class A | 418,563 | |||
Distribution expenses – Class B | 5,957 | |||
Distribution expenses – Class C | 376,852 | |||
Distribution expenses – Class R | 55,823 | |||
Dividend disbursing and transfer agent fees and expenses | 2,351,393 | |||
Accounting and administration expenses | 496,185 | |||
Legal fees | 99,200 | |||
Reports and statements to shareholders | 91,439 | |||
Registration fees | 84,607 | |||
Trustees’ fees and expenses | 70,814 | |||
Custodian fees | 46,994 | |||
Audit and tax | 14,152 | |||
Other | 31,643 | |||
|
| |||
12,133,532 | ||||
Less waived distribution expenses – Class B | (4,468 | ) | ||
Less expense paid indirectly | (227 | ) | ||
|
| |||
Total operating expenses | 12,128,837 | |||
|
| |||
Net Investment Income | 8,753,684 | |||
|
| |||
Net Realized and Unrealized Gain: | ||||
Net realized gain on investments | 43,594,136 | |||
Net change in unrealized appreciation (depreciation) of investments | 120,039,368 | |||
|
| |||
Net Realized and Unrealized Gain | 163,633,504 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 172,387,188 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
10
Statements of changes in net assets
Delaware U.S. Growth Fund
Six months ended 4/30/14 (Unaudited)
| Year ended 10/31/13
| |||||||
Increase in Net Assets from Operations: | ||||||||
Net investment income | $ | 8,753,684 | $ | 1,837,278 | ||||
Net realized gain | 43,594,136 | 114,719,095 | ||||||
Net change in unrealized appreciation (depreciation) | 120,039,368 | 288,392,710 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 172,387,188 | 404,949,083 | ||||||
|
|
|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Institutional Class | (1,820,767 | ) | (1,407,327 | ) | ||||
|
|
|
| |||||
(1,820,767 | ) | (1,407,327 | ) | |||||
|
|
|
| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 102,628,294 | 157,616,843 | ||||||
Class B | 13,324 | 67,162 | ||||||
Class C | 13,898,878 | 32,926,610 | ||||||
Class R | 3,915,589 | 17,216,523 | ||||||
Institutional Class | 383,205,795 | 1,255,751,527 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Institutional Class | 1,720,838 | 1,281,746 | ||||||
|
|
|
| |||||
505,382,718 | 1,464,860,411 | |||||||
|
|
|
| |||||
Cost of shares redeemed: | ||||||||
Class A | (51,875,738 | ) | (64,441,424 | ) | ||||
Class B | (692,952 | ) | (1,294,061 | ) | ||||
Class C | (6,685,058 | ) | (7,646,363 | ) | ||||
Class R | (7,969,909 | ) | (8,779,050 | ) | ||||
Institutional Class | (233,781,133 | ) | (312,149,814 | ) | ||||
|
|
|
| |||||
(301,004,790 | ) | (394,310,712 | ) | |||||
|
|
|
| |||||
Increase in net assets derived from capital share transactions | 204,377,928 | 1,070,549,699 | ||||||
|
|
|
| |||||
Net Increase in Net Assets | 374,944,349 | 1,474,091,455 | ||||||
Net Assets: | ||||||||
Beginning of period | 2,587,385,122 | 1,113,293,667 | ||||||
|
|
|
| |||||
End of period (including undistributed net investment income of $7,362,868 and $429,951, respectively) | $ | 2,962,329,471 | $ | 2,587,385,122 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
11
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 |
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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
12
Six months ended 4/30/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||||||
$ |
21.970 |
| $ | 17.310 | $ | 14.960 | $ | 13.450 | $ | 11.100 | $ | 9.380 | |||||||||||||||||
0.050 | (0.012 | ) | (0.031 | ) | 0.006 | (0.038 | ) | 0.001 | |||||||||||||||||||||
1.380 | 4.672 | 2.381 | 1.504 | 2.388 | 1.719 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
1.430 | 4.660 | 2.350 | 1.510 | 2.350 | 1.720 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 23.400 | $ | 21.970 | $ | 17.310 | $ | 14.960 | $ | 13.450 | $ | 11.100 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
6.51% | 26.92% | 15.71% | 11.23% | 21.17% | 18.34% | ||||||||||||||||||||||||
$ | 360,259 | $ | 290,303 | $ | 146,112 | $ | 60,615 | $ | 89,259 | $ | 128,702 | ||||||||||||||||||
1.06% | 1.09% | 1.10% | 1.10% | 1.07% | 1.00% | ||||||||||||||||||||||||
|
1.06% |
| 1.13% | 1.16% | 1.21% | 1.26% | 1.31% | ||||||||||||||||||||||
0.44% | (0.06% | ) | (0.19% | ) | 0.04% | (0.31% | ) | 0.00% | |||||||||||||||||||||
|
0.44% |
| (0.10% | ) | (0.25% | ) | (0.07% | ) | (0.50% | ) | (0.31% | ) | |||||||||||||||||
| 9%
|
|
| 23%
|
|
| 20%
|
|
| 25%
|
|
| 22%
|
|
| 30%
|
|
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 income (loss)2 |
Net realized and unrealized gain |
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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment loss to average net assets |
Portfolio turnover
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total 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/or distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
14
Six months ended 4/30/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||||||
$ |
18.770 |
| $ | 14.880 | $ | 12.960 | $ | 11.740 | $ | 9.760 | $ | 8.310 | |||||||||||||||||
0.043 | (0.125 | ) | (0.134 | ) | (0.090 | ) | (0.114 | ) | (0.058 | ) | |||||||||||||||||||
1.167 | 4.015 | 2.054 | 1.310 | 2.094 | 1.508 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
1.210 | 3.890 | 1.920 | 1.220 | 1.980 | 1.450 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 19.980 | $ | 18.770 | $ | 14.880 | $ | 12.960 | $ | 11.740 | $ | 9.760 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
6.45% | 26.14% | 14.81% | 10.39% | 20.29% | 17.45% | ||||||||||||||||||||||||
$ | 877 | $ | 1,460 | $ | 2,271 | $ | 3,288 | $ | 4,428 | $ | 5,564 | ||||||||||||||||||
1.06% | 1.79% | 1.85% | 1.85% | 1.82% | 1.75% | ||||||||||||||||||||||||
|
1.81% |
| 1.84% | 1.86% | 1.91% | 1.96% | 2.01% | ||||||||||||||||||||||
0.44% | (0.76% | ) | (0.94% | ) | (0.71% | ) | (1.06% | ) | (0.75% | ) | |||||||||||||||||||
|
(0.31% |
) | (0.81% | ) | (0.95% | ) | (0.77% | ) | (1.20% | ) | (1.01% | ) | |||||||||||||||||
| 9%
|
|
| 23%
|
|
| 20%
|
|
| 25%
|
|
| 22%
|
|
| 30%
|
|
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 |
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 |
Ratio of net investment loss to average net assets |
Ratio of net investment loss to average net assets |
Portfolio turnover
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
16
Six months ended 4/30/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||||||
$ |
20.330 |
| $ | 16.130 | $ | 14.050 | $ | 12.720 | $ | 10.580 | $ | 9.010 | |||||||||||||||||
(0.033 | ) | (0.147 | ) | (0.146 | ) | (0.098 | ) | (0.123 | ) | (0.065 | ) | ||||||||||||||||||
1.273 | 4.347 | 2.226 | 1.428 | 2.263 | 1.635 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
1.240 | 4.200 | 2.080 | 1.330 | 2.140 | 1.570 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 21.570 | $ | 20.330 | $ | 16.130 | $ | 14.050 | $ | 12.720 | $ | 10.580 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
6.10% | 26.04% | 14.80% | 10.46% | 20.23% | 17.43% | ||||||||||||||||||||||||
$ | 79,322 | $ | 67,898 | $ | 31,103 | $ | 13,456 | $ | 12,535 | $ | 13,112 | ||||||||||||||||||
1.81% | 1.84% | 1.85% | 1.85% | 1.82% | 1.75% | ||||||||||||||||||||||||
|
1.81% |
| 1.84% | 1.86% | 1.91% | 1.96% | 2.01% | ||||||||||||||||||||||
(0.31% | ) | (0.81% | ) | (0.94% | ) | (0.71% | ) | (1.06% | ) | (0.75% | ) | ||||||||||||||||||
|
(0.31% |
) | (0.81% | ) | (0.95% | ) | (0.77% | ) | (1.20% | ) | (1.01% | ) | |||||||||||||||||
| 9%
|
|
| 23%
|
|
| 20%
|
|
| 25%
|
|
| 22%
|
|
| 30%
|
|
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 |
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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during some of the periods shown reflects waivers by the manager and/or distributor. Performance would have been lower had the waivers not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
18
Six months ended 4/30/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||||||
$ |
21.430 |
| $ | 16.920 | $ | 14.660 | $ | 13.210 | $ | 10.930 | $ | 9.260 | |||||||||||||||||
0.021 | (0.059 | ) | (0.073 | ) | (0.030 | ) | (0.067 | ) | (0.022 | ) | |||||||||||||||||||
1.339 | 4.569 | 2.333 | 1.480 | 2.347 | 1.692 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
1.360 | 4.510 | 2.260 | 1.450 | 2.280 | 1.670 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 22.790 | $ | 21.430 | $ | 16.920 | $ | 14.660 | $ | 13.210 | $ | 10.930 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
6.35% | 26.66% | 15.42% | 10.98% | 20.86% | 18.03% | ||||||||||||||||||||||||
$ | 21,201 | $ | 23,815 | $ | 11,202 | $ | 1,697 | $ | 2,375 | $ | 2,336 | ||||||||||||||||||
1.31% | 1.34% | 1.35% | 1.35% | 1.32% | 1.25% | ||||||||||||||||||||||||
|
1.31% |
| 1.43% | 1.46% | 1.51% | 1.56% | 1.61% | ||||||||||||||||||||||
0.19% | (0.31% | ) | (0.44% | ) | (0.21% | ) | (0.56% | ) | (0.25% | ) | |||||||||||||||||||
|
0.19% |
| (0.40% | ) | (0.55% | ) | (0.37% | ) | (0.80% | ) | (0.61% | ) | |||||||||||||||||
| 9%
|
|
| 23%
|
|
| 20%
|
|
| 25%
|
|
| 22%
|
|
| 30%
|
|
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 |
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 |
Ratio of net investment income (loss) to average net assets |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover |
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during some of the periods shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
See accompanying notes, which are an integral part of the financial statements.
20
Six months ended 4/30/141 | Year ended | ||||||||||||||||||||||||||||
(Unaudited) | 10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||||||
$ |
23.310 |
| $ | 18.340 | $ | 15.830 | $ | 14.220 | $ | 11.710 | $ | 9.890 | |||||||||||||||||
0.084 | 0.039 | 0.011 | 0.045 | (0.008 | ) | 0.024 | |||||||||||||||||||||||
1.455 | 4.959 | 2.520 | 1.587 | 2.527 | 1.813 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
1.539 | 4.998 | 2.531 | 1.632 | 2.519 | 1.837 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.019 | ) | (0.028 | ) | (0.021 | ) | (0.022 | ) | (0.009 | ) | (0.017 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
(0.019 | ) | (0.028 | ) | (0.021 | ) | (0.022 | ) | (0.009 | ) | (0.017 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
$ | 24.830 | $ | 23.310 | $ | 18.340 | $ | 15.830 | $ | 14.220 | $ | 11.710 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
6.60% | 27.29% | 16.01% | 11.48% | 21.42% | 18.48% | ||||||||||||||||||||||||
$ | 2,500,670 | $ | 2,203,909 | $ | 922,606 | $ | 563,004 | $ | 477,361 | $ | 460,756 | ||||||||||||||||||
0.81% | 0.84% | 0.85% | 0.85% | 0.82% | 0.75% | ||||||||||||||||||||||||
|
0.81% |
| 0.84% | 0.86% | 0.91% | 0.96% | 1.01% | ||||||||||||||||||||||
0.69% | 0.19% | 0.06% | 0.29% | (0.06% | ) | 0.25% | |||||||||||||||||||||||
|
0.69% |
| 0.19% | 0.05% | 0.23% | (0.20% | ) | (0.01% | ) | ||||||||||||||||||||
| 9%
|
|
| 23%
|
|
| 20%
|
|
| 25%
|
|
| 22%
|
|
| 30%
|
|
21
Delaware U.S. Growth Fund | April 30, 2014 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities 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 1.00% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class B shares may be purchased only through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4.00% to zero depending upon the period of time the shares were held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately eight years after purchase. Class C shares are sold with a CDSC of 1.00%, if redeemed during the first 12 months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek 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 on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If, on a particular day, an equity security does not trade, then the mean between the bid and ask prices will be used, which approximates fair value. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security.
Federal Income Taxes – No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2010–Oct. 31, 2013), and has concluded that no provision for federal income tax is required in the Fund’s financial statements.
22
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, 2014.
Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all tax withholdings, a portion of which may be reclaimable. Withholding taxes and reclaims on foreign dividends have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares and pays distributions from net investment income and net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
Subject to seeking best execution, the Fund may direct certain security trades to brokers who have agreed to rebate a portion of the related brokerage commission to the Fund in cash. Such commission rebates are included in realized gain on investments in the accompanying financial statements and totaled $7,611 for the six months ended April 30, 2014. 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 may be used to offset custody fees. There were no earnings credits for the six months ended April 30, 2014.
23
Notes to financial statements
Delaware U.S. Growth Fund
1. Significant Accounting Policies (continued)
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than one dollar, the expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses and appears on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2014, the Fund earned $227 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 of $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 fund operating expenses (excluding any 12b-1 fees, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, acquired fund fees and expenses, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations (collectively nonroutine expenses)) do not exceed 0.85% of average daily net assets of the Fund from Nov. 1, 2013 through April 30, 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 may only be terminated by agreement of DMC and 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, 2014, the Fund was charged $67,513 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC fees based on the aggregate daily net assets of the retail funds within the Delaware Investments Family of Funds at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% on average daily net assets in excess of $30 billion. This amount is included in the statement of operations as dividend disbursing and transfer agent fees and expenses. For the six months ended April 30, 2014, the amount charged by DSC was $307,603. 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.
24
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 B and Class C shares, and 0.50% of the daily net assets of the Class R shares. DDLP has contracted to waive Class B shares 12b-1 fees from Nov. 1, 2013 through April 30, 2014** to 0.25% of average daily net assets. Institutional Class shares pay no distribution and service expenses.
As provided in the investment management agreement, the Fund bears a portion of the cost of resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended April 30, 2014, the Fund was charged $42,176 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates’ employees.
For the six months ended April 30, 2014, DDLP earned $53,136 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2014, DDLP received gross CDSC commissions of $6 and $262 on redemption of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, DSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
*The | contractual waiver period is Feb. 28, 2012 through Feb. 27, 2015. |
**The | contractual waiver period is Oct. 1, 2013 through Feb. 27, 2015. |
3. Investments
For the six months ended April 30, 2014, the Fund made purchases of $472,429,990 and sales of $255,284,591 of investment securities other than short-term investments.
At April 30, 2014, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2014, the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments | $ | 2,312,404,331 | ||
|
| |||
Aggregate unrealized appreciation | $ | 683,199,788 | ||
Aggregate unrealized depreciation | (44,148,551 | ) | ||
|
| |||
Net unrealized depreciation | $ | 639,051,237 | ||
|
|
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, 2013 will expire as follows: $27,065,298 expires in 2017.
On Dec. 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
25
Notes to financial statements
Delaware U.S. Growth Fund
3. Investments (continued)
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.
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 value 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.
26
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of April 30, 2014:
Level 1 | Level 2 | Total | ||||||||||
Common Stock | $ | 2,916,839,395 | $ | — | $ | 2,916,839,395 | ||||||
Short-Term Investments | — | 34,616,173 | 34,616,173 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 2,916,839,395 | $ | 34,616,173 | $ | 2,951,455,568 | ||||||
|
|
|
|
|
|
During the six months ended April 30, 2014, there were no transfers between Level 1 investments, Level 2 investments, or Level 3 investments that had a material impact to the Fund. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets. At April 30, 2014, there were no Level 3 investments.
4. Capital Shares
Transactions in capital shares were as follows:
Six months 4/30/14 | Year ended 10/31/13 | |||||||
Shares sold: | ||||||||
Class A | 4,417,859 | 8,064,934 | ||||||
Class B | 685 | 4,129 | ||||||
Class C | 650,189 | 1,834,459 | ||||||
Class R | 173,552 | 932,956 | ||||||
Institutional Class | 15,583,220 | 59,025,140 | ||||||
Shares issued upon reinvestment of dividends and | ||||||||
Institutional Class | 69,875 | 69,723 | ||||||
|
|
|
| |||||
20,895,380 | 69,931,341 | |||||||
|
|
|
| |||||
Shares redeemed: | ||||||||
Class A | (2,232,034 | ) | (3,297,022 | ) | ||||
Class B | (34,552 | ) | (78,949 | ) | ||||
Class C | (312,155 | ) | (423,054 | ) | ||||
Class R | (354,493 | ) | (483,774 | ) | ||||
Institutional Class | (9,497,705 | ) | (14,849,574 | ) | ||||
|
|
|
| |||||
(12,430,939 | ) | (19,132,373 | ) | |||||
|
|
|
| |||||
Net increase | 8,464,441 | 50,798,968 | ||||||
|
|
|
|
27
Notes to financial statements
Delaware U.S. Growth Fund
4. Capital Shares (continued)
For the six months ended April 30, 2014 and the year ended Oct. 31, 2013, 20,868 Class B shares were converted to 17,824 Class A shares valued at $420,336 and 36,910 Class B shares were converted to 31,642 Class A shares valued at $603,231, respectively. The respective amounts are included in Class B redemptions and Class A subscriptions in the table on the previous page and the statements of changes in net assets.
5. Line of Credit
The Fund, along with certain other funds in the Delaware Investments® Family of Funds (Participants), 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 of 0.08%, 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 available under the agreement expired on Nov. 12, 2013.
On Nov. 12, 2013, the Fund, along with the other Participants, entered into an amendment to the agreement for a $225,000,000 revolving line of credit. The line of credit 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 will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of April 30, 2014 or at any time during the period then ended.
6. Offsetting
In December 2011, the Financial Accounting Standards Board (FASB) issued guidance that expands current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures are required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the statement of assets and liabilities and require an entity to disclose both gross and net information about such investments and transactions in the financial statements. In January 2013, the FASB issued guidance that clarifies which investments and transactions are subject to the offsetting disclosure requirements. The scope of the disclosure requirements for offsetting is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance is effective for financial statements with fiscal years beginning on or after Jan. 1, 2013, and interim periods within those fiscal years. The Fund adopted the disclosure provisions on offsetting during the current reporting period.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with their derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs over-the-counter (OTC) derivatives and foreign exchange contracts and typically contains, among other things, collateral posting items and netting provisions in the event of a default and/or termination event.
28
Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) netting including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
At April 30, 2014, the Fund had the following assets and liabilities subject to offsetting provisions:
Master Repurchase Agreements
Counterparty | Repurchase Agreements | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Net Amount(a) | ||||||||||||||||
Bank of America | $ | 5,703,028 | $ | (5,703,028 | ) | $ | — | $— | ||||||||||||
Bank of Montreal | 1,901,009 | (1,901,009 | ) | — | — | |||||||||||||||
BNP Paribas | 22,264,963 | (22,264,963 | ) | — | — | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 29,869,000 | $ | (29,869,000 | ) | $ | — | $— | ||||||||||||
|
|
|
|
|
|
|
|
(a)Net | amount represents the receivable/(payable) that would be due from/(to) the counterparty in the event of default. |
7. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day may be more or less than the value of the security on loan.
29
Notes to financial statements
Delaware U.S. Growth Fund
7. Securities Lending (continued)
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities, and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
At April 30, 2014, the Fund had no securities out on loan.
8. 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 illiquid 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
30
investments in illiquid securities. As of April 30, 2014, there were no Rule 144A securities held by the Fund and no securities have been determined to be illiquid under the Fund’s Liquidity Procedures.
9. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
10. Subsequent Events
Effective May 16, 2014, Jackson Square Partners, LLC (JSP) is serving as sub-advisor to the Fund.
Management has determined that no other material events or transactions occurred subsequent to April 30, 2014 that would require recognition or disclosure in the Fund’s financial statements.
31
Board of trustees | ||||||
Patrick P. Coyne | Joseph W. Chow | Lucinda S. Landreth | Thomas K. Whitford | |||
Chairman, President, and | Former Executive Vice | Former Chief Investment | Former Vice Chairman | |||
Chief Executive Officer | President | Officer | PNC Financial Services Group | |||
Delaware Investments ® | State Street Corporation | Assurant, Inc. | Pittsburgh, PA | |||
Family of Funds | Brookline, MA | Philadelphia, PA | ||||
Philadelphia, PA | Janet L. Yeomans | |||||
John A. Fry | Frances A. | Former Vice President | ||||
Thomas L. Bennett | President | Sevilla-Sacasa | and Treasurer | |||
Private Investor | Drexel University | Chief Executive Officer | 3M Corporation | |||
Rosemont, PA | Philadelphia, PA | Banco Itaú | St. Paul, MN | |||
International | ||||||
Miami, FL | J. Richard Zecher | |||||
Founder | ||||||
Investor Analytics | ||||||
Scottsdale, AZ | ||||||
Affiliated officers | ||||||
David F. Connor | Daniel V. Geatens | David P. O’Connor | Richard Salus | |||
Senior Vice President, | Vice President and | Executive Vice President, | Senior Vice President and | |||
Deputy General Counsel, | Treasurer | General Counsel, | Chief Financial Officer | |||
and Secretary | Delaware Investments | and Chief Legal Officer | Delaware Investments | |||
Delaware Investments | Family of Funds | Delaware Investments | Family of Funds | |||
Family of Funds | Philadelphia, PA | Family of Funds | Philadelphia, PA | |||
Philadelphia, PA | Philadelphia, PA |
This semiannual report is for the information of Delaware 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
Table of Contents
Semiannual report
Alternative / specialty mutual fund
Delaware Global Real Estate Opportunities Fund
April 30, 2014
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund’s prospectus and its summary prospectus, which may be obtained by visiting delawareinvestments.com or calling 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.
You can obtain shareholder reports and prospectuses online instead of in the mail.
Visit delawareinvestments.com/edelivery.
Table of Contents
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.
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 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.
1 | ||||
3 | ||||
5 | ||||
10 | ||||
12 | ||||
14 | ||||
16 | ||||
24 | ||||
37 |
Unless otherwise noted, views expressed herein are current as of April 30, 2014, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries, including the Fund’s distributor, Delaware Distributors, L.P. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
©2014 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Table of Contents
For the six-month period from November 1, 2013 to April 30, 2014 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Nov. 1, 2013 to April 30, 2014.
Actual expenses
The first section of the table shown, “Actual Fund return,” provides information about actual account values and actual expenses. You may use the information in this section of the table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second section of the table shown, “Hypothetical 5% return,” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund’s expenses shown in the table reflect fee waivers in effect. The expenses shown in the table assume reinvestment of all dividends and distributions.
1
Table of Contents
Disclosure of Fund expenses | ||||
For the six-month period from November 1, 2013 to April 30, 2014 (Unaudited) |
Delaware Global Real Estate Opportunities Fund
Expense analysis of an investment of $1,000
Beginning Account Value 11/1/13 | Ending Account Value 4/30/14 | Annualized Expense Ratio | Expenses Paid During Period 11/1/13 to 4/30/14* | |||||||||||||||||||
Actual Fund return† | ||||||||||||||||||||||
Class A | $1,000.00 | $1,042.90 | 1.40% | $7.09 | ||||||||||||||||||
Class C | 1,000.00 | 1,039.30 | 2.15% | 10.87 | ||||||||||||||||||
Class R | 1,000.00 | 1,042.90 | 1.65% | 8.36 | ||||||||||||||||||
Institutional Class | 1,000.00 | 1,044.20 | 1.15% | 5.83 | ||||||||||||||||||
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
Table of Contents
Security type / country and sector allocations | ||||
Delaware Global Real Estate Opportunities Fund | As of April 30, 2014 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications, which may result in the sector designations for one fund being different than another fund’s sector designations.
Security type / country | Percentage of net assets | ||||
Convertible Bond | 1.12 | % | |||
Common Stock by Country | 96.17 | % | |||
Australia | 8.43 | % | |||
Canada | 2.25 | % | |||
China/Hong Kong | 6.55 | % | |||
France | 2.87 | % | |||
Germany | 2.46 | % | |||
Italy | 0.68 | % | |||
Japan | 8.21 | % | |||
Mexico | 0.75 | % | |||
Netherlands | 0.65 | % | |||
Singapore | 2.40 | % | |||
Spain | 0.98 | % | |||
Sweden | 1.85 | % | |||
United Kingdom | 6.57 | % | |||
United States | 51.52 | % | |||
Warrant | 0.01 | % | |||
Short-Term Investments | 0.99 | % | |||
Total Value of Securities | 98.29 | % | |||
Receivables and Other Assets Net of Liabilities | 1.71 | % | |||
Total Net Assets | 100.00 | % |
3
Table of Contents
Security type / country and sector allocations | ||||
Delaware Global Real Estate Opportunities Fund |
Convertible bond, common stock and warrant by sector | Percentage of net assets | ||||
Diversified REITs | 14.58 | % | |||
Healthcare REITs | 3.73 | % | |||
Hotel REITs | 6.04 | % | |||
Industrial REITs | 6.37 | % | |||
Mall REITs | 9.60 | % | |||
Multifamily REITs | 11.86 | % | |||
Office REITs | 15.34 | % | |||
Office/Industrial REITs | 7.75 | % | |||
Real Estate Operating Companies/Developer | 8.13 | % | |||
Retail REITs | 5.34 | % | |||
Self-Storage REITs | 1.49 | % | |||
Shopping Center REITs | 3.59 | % | |||
Single Tenant REITs | 1.06 | % | |||
Specialty REITs | 2.41 | % | |||
Total | 97.29 | % |
4
Table of Contents
Schedule of investments | ||||
Delaware Global Real Estate Opportunities Fund | April 30, 2014 (Unaudited) |
Principal amount° | Value (U.S. $) | |||||||
| ||||||||
Convertible Bond – 1.12% | ||||||||
| ||||||||
Forest City Enterprises 144A 3.625% exercise price $24.21, expiration date 8/14/20 # | 542,000 | $ | 562,664 | |||||
|
| |||||||
Total Convertible Bond (cost $554,994) | 562,664 | |||||||
|
| |||||||
Number of shares | ||||||||
| ||||||||
Common Stock – 96.17%D | ||||||||
| ||||||||
Australia – 8.43% | ||||||||
Dexus Property Group | 1,092,697 | 1,152,466 | ||||||
Goodman Group | 127,429 | 589,699 | ||||||
GPT Group-In Specie @=† | 1,377,200 | 0 | ||||||
Investa Office Fund | 137,708 | 427,404 | ||||||
Mirvac Group | 502,517 | 817,187 | ||||||
Westfield Group | 58,282 | 593,036 | ||||||
Westfield Retail Trust | 216,861 | 642,843 | ||||||
|
| |||||||
4,222,635 | ||||||||
|
| |||||||
Canada – 2.25% | ||||||||
Allied Properties Real Estate Investment Trust | 8,000 | 249,742 | ||||||
Boardwalk Real Estate Investment Trust | 4,683 | 264,010 | ||||||
H&R Real Estate Investment Trust | 29,100 | 612,883 | ||||||
|
| |||||||
1,126,635 | ||||||||
|
| |||||||
China/Hong Kong – 6.55% | ||||||||
Hongkong Land Holdings | 90,000 | 630,000 | ||||||
Hysan Development | 151,072 | 645,952 | ||||||
Link REIT | 123,500 | 614,079 | ||||||
Sun Hung Kai Properties | 76,053 | 957,903 | ||||||
Wharf Holdings | 61,685 | 431,631 | ||||||
|
| |||||||
3,279,565 | ||||||||
|
| |||||||
France – 2.87% | ||||||||
Klepierre | 11,694 | 536,073 | ||||||
Unibail-Rodamco | 3,350 | 903,665 | ||||||
|
| |||||||
1,439,738 | ||||||||
|
| |||||||
Germany – 2.46% | ||||||||
Alstria Office REIT | 44,588 | 615,145 | ||||||
Deutsche Annington Immobilien † | 21,354 | 616,165 | ||||||
|
| |||||||
1,231,310 | ||||||||
|
| |||||||
Italy – 0.68% | ||||||||
Beni Stabili | 380,241 | 339,439 | ||||||
|
| |||||||
339,439 | ||||||||
|
| |||||||
Japan – 8.21% | ||||||||
GLP J-REIT † | 592 | 584,384 | ||||||
Japan Real Estate Investment | 53 | 280,517 | ||||||
Kenedix Office Investment | 61 | 304,358 |
5
Table of Contents
Schedule of investments | ||||
Delaware Global Real Estate Opportunities Fund |
Number of shares | Value (U.S. $) | |||||||
| ||||||||
Common StockD (continued) | ||||||||
| ||||||||
Japan (continued) | ||||||||
Mitsubishi Estate | 38,642 | $ | 874,799 | |||||
Mitsui Fudosan | 34,446 | 1,018,064 | ||||||
Nippon Building Fund | 71 | 393,152 | ||||||
Sumitomo Realty & Development | 17,000 | 658,612 | ||||||
|
| |||||||
4,113,886 | ||||||||
|
| |||||||
Mexico – 0.75% | ||||||||
Concentradora Fibra Hotelera Mexicana | 227,431 | 375,645 | ||||||
|
| |||||||
375,645 | ||||||||
|
| |||||||
Netherlands – 0.65% | ||||||||
Corio | 6,940 | 324,784 | ||||||
|
| |||||||
324,784 | ||||||||
|
| |||||||
Singapore – 2.40% | ||||||||
CapitaCommercial Trust | 271,000 | 345,925 | ||||||
Mapletree Commercial Trust | 334,694 | 337,778 | ||||||
Suntec Real Estate Investment Trust | 379,000 | 518,557 | ||||||
|
| |||||||
1,202,260 | ||||||||
|
| |||||||
Spain – 0.98% | ||||||||
Lar Espana Real Estate Socimi † | 34,367 | 491,059 | ||||||
|
| |||||||
491,059 | ||||||||
|
| |||||||
Sweden – 1.85% | ||||||||
Castellum | 23,342 | 397,027 | ||||||
Hufvudstaden Class A | 36,148 | 528,122 | ||||||
|
| |||||||
925,149 | ||||||||
|
| |||||||
United Kingdom – 6.57% | ||||||||
British Land | 84,250 | 982,249 | ||||||
Derwent London | 13,505 | 620,228 | ||||||
Great Portland Estates | 76,858 | 813,663 | ||||||
Segro | 148,453 | 877,043 | ||||||
|
| |||||||
3,293,183 | ||||||||
|
| |||||||
United States – 51.52% | ||||||||
American Campus Communities | 17,616 | 672,931 | ||||||
Apartment Investment & Management | 18,561 | 572,236 | ||||||
AvalonBay Communities | 6,742 | 920,620 | ||||||
Boston Properties | 9,917 | 1,161,677 | ||||||
Camden Property Trust | 5,949 | 407,447 | ||||||
Corporate Office Properties Trust | 15,375 | 411,281 | ||||||
DDR | 27,025 | 464,019 | ||||||
DiamondRock Hospitality | 36,094 | 442,873 | ||||||
Douglas Emmett | 15,729 | 434,120 | ||||||
Duke Realty | 43,202 | 756,899 | ||||||
EPR Properties | 11,624 | 623,163 |
6
Table of Contents
Number of shares | Value (U.S. $) | |||||||
| ||||||||
Common StockD (continued) | ||||||||
| ||||||||
United States (continued) | ||||||||
Equity Residential | 11,439 | $ | 679,934 | |||||
Essex Property Trust | 2,118 | 366,965 | ||||||
First Industrial Realty Trust | 21,431 | 393,687 | ||||||
General Growth Properties | 47,495 | 1,090,960 | ||||||
Healthcare Realty Trust | 13,412 | 337,312 | ||||||
Healthcare Trust of America Class A | 35,548 | 415,556 | ||||||
Highwoods Properties | 7,708 | 311,018 | ||||||
Host Hotels & Resorts | 43,745 | 938,330 | ||||||
Kilroy Realty | 6,885 | 410,139 | ||||||
Kimco Realty | 22,925 | 525,441 | ||||||
Macerich | 6,145 | 398,872 | ||||||
Pebblebrook Hotel Trust | 11,744 | 404,463 | ||||||
Post Properties | 11,556 | 580,227 | ||||||
Prologis | 21,127 | 858,390 | ||||||
PS Business Parks | 6,437 | 552,102 | ||||||
Public Storage | 4,252 | 746,269 | ||||||
Ramco-Gershenson Properties Trust | 18,506 | 304,979 | ||||||
RLJ Lodging Trust | 12,053 | 321,454 | ||||||
Sabra Health Care REIT | 13,409 | 401,868 | ||||||
Simon Property Group | 16,176 | 2,801,683 | ||||||
SL Green Realty | 8,111 | 849,303 | ||||||
Spirit Realty Capital | 49,439 | 532,458 | ||||||
STAG Industrial | 20,082 | 472,529 | ||||||
Strategic Hotels & Resorts † | 50,386 | 543,665 | ||||||
Tanger Factory Outlet Centers | 14,083 | 502,481 | ||||||
Taubman Centers | 7,087 | 516,217 | ||||||
UDR | 33,275 | 860,492 | ||||||
Ventas | 10,825 | 715,316 | ||||||
Vornado Realty Trust | 6,818 | 699,527 | ||||||
Washington Real Estate Investment Trust | 16,882 | 412,934 | ||||||
|
| |||||||
25,811,837 | ||||||||
|
| |||||||
Total Common Stock (cost $44,424,126) | 48,177,125 | |||||||
|
| |||||||
| ||||||||
Warrant – 0.01%D | ||||||||
| ||||||||
Hong Kong – 0.01% | ||||||||
Sun Hung Kai Properties CW16 strike price HKD98.60, expiration date 4/22/16 † | 6,671 | 4,492 | ||||||
|
| |||||||
Total Warrant (cost $0) | 4,492 | |||||||
|
|
7
Table of Contents
Schedule of investments | ||||
Delaware Global Real Estate Opportunities Fund |
Principal amount° | Value (U.S. $) | |||||||||
| ||||||||||
Short-Term Investments – 0.99% | ||||||||||
| ||||||||||
Repurchase Agreements – 0.75% | ||||||||||
Bank of America Merrill Lynch | 71,982 | $ | 71,982 | |||||||
Bank of Montreal | 23,994 | 23,994 | ||||||||
BNP Paribas | 281,024 | 281,024 | ||||||||
|
| |||||||||
377,000 | ||||||||||
|
| |||||||||
U.S. Treasury Obligation – 0.24%≠ | ||||||||||
U.S. Treasury Bill 0.093% 11/13/14 | 119,490 | 119,463 | ||||||||
|
| |||||||||
119,463 | ||||||||||
|
| |||||||||
Total Short-Term Investments (cost $496,430) | 496,463 | |||||||||
|
| |||||||||
Total Value of Securities – 98.29% (cost $45,475,550) | $ | 49,240,744 | ||||||||
|
|
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At April 30, 2014, the aggregate value of Rule 144A securities was $562,664, which represents 1.12% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
@ | Illiquid security. At April 30, 2014, the aggregate value of illiquid securities was $0, which represents 0.00% of the Fund’s net assets. See Note 9 in “Notes to financial statements.” |
= | Security is being fair valued in accordance with the Fund’s fair valuation policy. At April 30, 2014, the aggregate value of fair valued securities was $0, which represents 0.00% of the Fund’s net assets. See Note 1 in “Notes to financial statements.” |
≠ | The rate shown is the effective yield at the time of purchase. |
° | Principal amount shown is stated in U.S. dollars unless noted that the security is denominated in another currency. |
† | Non income producing security. |
D | Securities have been classified by country of origin. |
8
Table of Contents
The following foreign currency exchange contracts were outstanding at April 30, 2014:1
Foreign Currency Exchange Contracts
Counterparty | Contracts to Receive (Deliver) | In Exchange For | Settlement Date | Unrealized | ||||||||||||||
BNYM | AUD | (303,992 | ) | USD | 281,083 | 5/1/14 | $ | (1,383 | ) | |||||||||
BNYM | GBP | (39,441 | ) | USD | 66,288 | 5/2/14 | (305 | ) | ||||||||||
BNYM | JPY | (24,928,646 | ) | USD | 242,994 | 5/2/14 | (893 | ) | ||||||||||
BNYM | SGD | (102,369 | ) | USD | 81,420 | 5/2/14 | (250 | ) | ||||||||||
|
| |||||||||||||||||
$ | (2,831 | ) | ||||||||||||||||
|
|
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 contracts 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.
1See Note 7 in “Notes to financial statements.”
Summary of abbreviations:
AUD – Australian Dollar
BNYM – BNY Mellon
GBP – British Pound Sterling
HKD – Hong Kong Dollar
JPY – Japanese Yen
REIT – Real Estate Investment Trust
SGD – Singapore Dollar
USD – United States Dollar
See accompanying notes, which are an integral part of the financial statements.
9
Table of Contents
Statement of assets and liabilities | ||||
Delaware Global Real Estate Opportunities Fund | April 30, 2014 (Unaudited) |
Assets: | ||||
Investments, at value1 | $ | 48,744,281 | ||
Short-term investments, at value2 | 496,463 | |||
Cash | 37,661 | |||
Foreign currencies, at value3 | 19,534 | |||
Receivable for securities sold | 849,250 | |||
Receivable for fund shares sold | 340,270 | |||
Dividends and interest receivable | 131,383 | |||
|
| |||
Total assets | 50,618,842 | |||
|
| |||
Liabilities: | ||||
Payable for securities purchased | 230,962 | |||
Payable for fund shares redeemed | 212,431 | |||
Audit fees payable | 15,818 | |||
Investment management fees payable | 29,711 | |||
Other accrued expenses | 23,523 | |||
Distribution fees payable to affiliates | 2,387 | |||
Other affiliates payable | 2,259 | |||
Trustees’ fees and expenses payable | 134 | |||
Unrealized loss on foreign currency exchange contracts | 2,831 | |||
|
| |||
Total liabilities | 520,056 | |||
|
| |||
Total Net Assets | $ | 50,098,786 | ||
|
| |||
Net Assets Consist of: | ||||
Paid-in capital | $ | 143,368,433 | ||
Distributions in excess of net investment income | (277,045 | ) | ||
Accumulated net realized loss on investments | (96,758,835 | ) | ||
Net unrealized appreciation of investments and derivatives | 3,766,233 | |||
|
| |||
Total Net Assets | $ | 50,098,786 | ||
|
| |||
1Investments, at cost | $ | 44,979,120 | ||
2Short-term investments, at cost | 496,430 | |||
3Foreign currencies, at cost | 19,507 |
10
Table of Contents
Net Asset Value | ||||
Class A: | ||||
Net assets | $ | 6,714,673 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 992,677 | |||
Net asset value per share | $ | 6.76 | ||
Sales charge | 5.75 | % | ||
Offering price per share, equal to net asset value per share/(1 – sales charge) | $ | 7.17 | ||
Class C: | ||||
Net assets | $ | 1,447,008 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 214,251 | |||
Net asset value per share | $ | 6.75 | ||
Class R: | ||||
Net assets | $ | 53,101 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 7,860 | |||
Net asset value per share | $ | 6.76 | ||
Institutional Class: | ||||
Net assets | $ | 41,884,004 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par | 6,196,148 | |||
Net asset value per share | $ | 6.76 |
See accompanying notes, which are an integral part of the financial statements.
11
Table of Contents
Statement of operations | ||||
Delaware Global Real Estate Opportunities Fund | Six months ended April 30, 2014 (Unaudited) |
Investment Income: | ||||
Dividends | $ | 843,846 | ||
Interest | 6,620 | |||
Securities lending income | 2 | |||
Foreign tax withheld | (20,280 | ) | ||
|
| |||
830,188 | ||||
|
| |||
Expenses: | ||||
Management fees | 253,492 | |||
Distribution expenses – Class A | 6,225 | |||
Distribution expenses – Class C | 5,059 | |||
Distribution expenses – Class R | 90 | |||
Registration fees | 32,852 | |||
Audit and tax | 22,937 | |||
Dividend disbursing and transfer agent fees and expenses | 15,169 | |||
Reports and statements to shareholders | 9,921 | |||
Accounting and administration expenses | 9,095 | |||
Custodian fees | 7,667 | |||
Legal fees | 2,502 | |||
Trustees’ fees and expenses | 1,343 | |||
Other | 7,294 | |||
|
| |||
373,646 | ||||
Less expenses waived | (67,510 | ) | ||
Less expense paid indirectly | (8 | ) | ||
|
| |||
Total operating expenses | 306,128 | |||
|
| |||
Net Investment Income | 524,060 | |||
|
| |||
Net Realized and Unrealized Gain (Loss): | ||||
Net realized gain (loss) on: | ||||
Investments | 1,002,753 | |||
Foreign currencies | 13,150 | |||
Foreign currency exchange contracts | (41,229 | ) | ||
|
| |||
Net realized gain | 974,674 | |||
|
| |||
Net change in unrealized appreciation (depreciation) of: | ||||
Investments | 628,186 | |||
Foreign currencies | 3,353 | |||
Foreign currency exchange contracts | (2,387 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | 629,152 | |||
|
| |||
Net Realized and Unrealized Gain | 1,603,826 | |||
|
| |||
Net Increase in Net Assets Resulting from Operations | $ | 2,127,886 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
12
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Statements of changes in net assets | ||||
Delaware Global Real Estate Opportunities Fund |
Six months 4/30/14 (Unaudited) | Year ended 10/31/13 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 524,060 | $ | 947,006 | ||||
Net realized gain | 974,674 | 10,725,716 | ||||||
Net change in unrealized appreciation (depreciation) | 629,152 | (2,088,740 | ) | |||||
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|
|
| |||||
Net increase in net assets resulting from operations | 2,127,886 | 9,583,982 | ||||||
|
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|
| |||||
Dividends and Distributions to Shareholders from: | ||||||||
Net investment income: | ||||||||
Class A | (109,183 | ) | (43,533 | ) | ||||
Class C | (16,557 | ) | (1,019 | ) | ||||
Class R | (579 | ) | (200 | ) | ||||
Institutional Class | (1,238,774 | ) | (2,409,597 | ) | ||||
|
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| |||||
(1,365,093 | ) | (2,454,349 | ) | |||||
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| |||||
Capital Share Transactions: | ||||||||
Proceeds from shares sold: | ||||||||
Class A | 3,217,975 | 4,848,064 | ||||||
Class C | 886,691 | 533,552 | ||||||
Class R | 26,867 | 16,130 | ||||||
Institutional Class | 4,301,805 | 5,978,853 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: | ||||||||
Class A | 103,247 | 36,689 | ||||||
Class C | 16,557 | 1,018 | ||||||
Class R | 578 | 199 | ||||||
Institutional Class | 194,666 | 1,994,281 | ||||||
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| |||||
8,748,386 | 13,408,786 | |||||||
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14
Table of Contents
Six months ended 4/30/14 (Unaudited) | Year ended 10/31/13 | |||||||
Cost of shares redeemed: | ||||||||
Class A | $ | (1,113,605 | ) | $ | (1,049,483 | ) | ||
Class C | (70,872 | ) | (3,384 | ) | ||||
Class R | (11 | ) | — | |||||
Institutional Class | (12,455,025 | ) | (42,013,438 | ) | ||||
|
|
|
| |||||
(13,639,513 | ) | (43,066,305 | ) | |||||
|
|
|
| |||||
Decrease in net assets derived from capital share transactions | (4,891,127 | ) | (29,657,519 | ) | ||||
|
|
|
| |||||
Net Decrease in Net Assets | (4,128,334 | ) | (22,527,886 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 54,227,120 | 76,755,006 | ||||||
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|
|
| |||||
End of period (including undistributed (distributions in excess of) net investment income of $(277,045) and $563,988, respectively) | $ | 50,098,786 | $ | 54,227,120 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
15
Table of Contents
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 for 2012 and earlier is historical information for The Global Real Estate Securities Portfolio. Because the Fund’s fees and expenses are higher than those of The Global Real Estate Securities Portfolio, the Fund’s performance would have been lower than that of 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. |
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. |
See accompanying notes, which are an integral part of the financial statements.
16
Table of Contents
Six months ended 4/30/142 (Unaudited) | Year ended | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||
| ||||||||||||||||||||||||
$ | 6.650 | $ | 6.060 | $ | 5.370 | $ | 5.780 | $ | 5.040 | $ | 4.420 | |||||||||||||
0.059 | 0.079 | 0.103 | 0.148 | 0.129 | 0.129 | |||||||||||||||||||
0.214 | 0.696 | 0.799 | (0.069 | ) | 0.973 | 0.491 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
0.273 | 0.775 | 0.902 | 0.079 | 1.102 | 0.620 | |||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||
(0.163 | ) | (0.185 | ) | (0.212 | ) | (0.489 | ) | (0.362 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.163 | ) | (0.185 | ) | (0.212 | ) | (0.489 | ) | (0.362 | ) | — | ||||||||||||||
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|
|
|
|
|
|
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| |||||||||||||
$ | 6.760 | $ | 6.650 | $ | 6.060 | $ | 5.370 | $ | 5.780 | $ | 5.040 | |||||||||||||
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|
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|
|
|
|
|
| |||||||||||||
4.29% | 13.11% | 17.79% | 1.68% | 23.26% | 14.03% | |||||||||||||||||||
$ | 6,715 | $ | 4,340 | $ | 297 | $ | 8 | $ | 8 | $ | 6 | |||||||||||||
1.40% | 1.40% | 1.38% | 1.39% | 1.50% | 1.32% | |||||||||||||||||||
1.66% | 1.66% | 1.52% | 1.49% | 1.50% | 1.46% | |||||||||||||||||||
1.84% | 1.21% | 1.65% | 2.69% | 2.52% | 3.20% | |||||||||||||||||||
1.58% | 0.95% | 1.51% | 2.59% | 2.52% | 3.06% | |||||||||||||||||||
54% | 112% | 128% | 155% | 185% | 124% | |||||||||||||||||||
|
17
Table of Contents
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:
|
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income (loss)3 |
Net realized and unrealized gain |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Total dividends and distributions |
Net asset value, end of period |
Total 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 (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 | 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 entire annual period. |
See accompanying notes, which are an integral part of the financial statements.
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Six months ended 4/30/141 (Unaudited) | Year ended 10/31/13 | 10/1/122 to 10/31/12 | ||||||||||||||
| ||||||||||||||||
$ | 6.640 | $ | 6.060 | $ | 5.960 | |||||||||||
0.035 | 0.030 | (0.005 | ) | |||||||||||||
0.206 | 0.705 | 0.105 | ||||||||||||||
|
|
|
|
|
| |||||||||||
0.241 | 0.735 | 0.100 | ||||||||||||||
|
|
|
|
|
| |||||||||||
(0.131 | ) | (0.155 | ) | — | ||||||||||||
|
|
|
|
|
| |||||||||||
(0.131 | ) | (0.155 | ) | — | ||||||||||||
|
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|
|
|
| |||||||||||
$ | 6.750 | $ | 6.640 | $ | 6.060 | |||||||||||
|
|
|
|
|
| |||||||||||
3.93% | 12.23% | 1.68% | ||||||||||||||
$ | 1,447 | $ | 572 | $ | 25 | |||||||||||
2.15% | 2.15% | 2.15% | ||||||||||||||
2.41% | 2.41% | 2.52% | ||||||||||||||
1.09% | 0.46% | (0.93% | ) | |||||||||||||
0.83% | 0.20% | (1.30% | ) | |||||||||||||
54% | 112% | 128% | 5 | |||||||||||||
|
19
Table of Contents
Financial highlights | ||||
Delaware Global Real Estate Opportunities 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)3 |
Net realized and unrealized gain |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Total dividends and distributions |
Net asset value, end of period |
Total 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 (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 | 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 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.
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Table of Contents
Six months ended 4/30/141 (Unaudited) | Year ended 10/31/13 | 10/1/122 to 10/31/12 | ||||||||||||||
| ||||||||||||||||
$ | 6.640 | $ | 6.060 | $ | 5.960 | |||||||||||
0.051 | 0.062 | (0.002 | ) | |||||||||||||
0.222 | 0.699 | 0.102 | ||||||||||||||
|
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|
|
|
| |||||||||||
0.273 | 0.761 | 0.100 | ||||||||||||||
|
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|
|
|
| |||||||||||
(0.153 | ) | (0.181 | ) | — | ||||||||||||
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|
| |||||||||||
(0.153 | ) | (0.181 | ) | — | ||||||||||||
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| |||||||||||
$ | 6.760 | $ | 6.640 | $ | 6.060 | |||||||||||
|
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|
|
|
| |||||||||||
4.29% | 12.87% | 1.68% | ||||||||||||||
$ | 53 | $ | 24 | $ | 7 | |||||||||||
1.65% | 1.65% | 1.65% | ||||||||||||||
1.91% | 2.00% | 2.12% | ||||||||||||||
1.59% | 0.96% | (0.43% | ) | |||||||||||||
1.33% | 0.61% | (0.90% | ) | |||||||||||||
54% | 112% | 128% | 5 | |||||||||||||
|
21
Table of Contents
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 for 2012 and earlier is historical information for The Global Real Estate Securities Portfolio. Because the Fund’s fees and expenses are higher than those of The Global Real Estate Securities Portfolio, the Fund’s performance would have been lower than that of 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. |
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. |
See accompanying notes, which are an integral part of the financial statements.
22
Table of Contents
Six months ended 4/30/142 (Unaudited) | Year ended | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
10/31/13 | 10/31/12 | 10/31/11 | 10/31/10 | 10/31/09 | ||||||||||||||||||||
| ||||||||||||||||||||||||
$ | 6.650 | $ | 6.060 | $ | 5.390 | $ | 5.790 | $ | 5.050 | $ | 4.430 | |||||||||||||
0.067 | 0.094 | 0.105 | 0.163 | 0.142 | 0.139 | |||||||||||||||||||
0.214 | 0.707 | 0.791 | (0.061 | ) | 0.971 | 0.490 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
0.281 | 0.801 | 0.896 | 0.102 | 1.113 | 0.629 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.171 | ) | (0.211 | ) | (0.226 | ) | (0.502 | ) | (0.373 | ) | (0.009 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
(0.171 | ) | (0.211 | ) | (0.226 | ) | (0.502 | ) | (0.373 | ) | (0.009 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
$ | 6.760 | $ | 6.650 | $ | 6.060 | $ | 5.390 | $ | 5.790 | $ | 5.050 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
4.42% | 13.58% | 17.68% | 2.10% | 23.49% | 13.75% | |||||||||||||||||||
$ | 41,884 | $ | 49,291 | $ | 76,426 | $ | 49,359 | $ | 60,307 | $ | 54,761 | |||||||||||||
1.15% | 1.15% | 1.13% | 1.14% | 1.25% | 1.07% | |||||||||||||||||||
1.41% | 1.41% | 1.27% | 1.24% | 1.25% | 1.21% | |||||||||||||||||||
2.09% | 1.46% | 1.90% | 2.94% | 2.77% | 3.45% | |||||||||||||||||||
1.83% | 1.20% | 1.76% | 2.84% | 2.77% | 3.31% | |||||||||||||||||||
54% | 112% | 128% | 155% | 185% | 124% | |||||||||||||||||||
|
23
Table of Contents
Notes to financial statements | ||||
Delaware Global Real Estate Opportunities Fund | April 30, 2014 (Unaudited) |
Delaware Group® Adviser Funds (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Diversified Income Fund, Delaware Global Real Estate Opportunities Fund, and Delaware U.S. Growth Fund. These financial statements and related notes pertain to Delaware Global Real Estate Opportunities Fund (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 1.00% if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, if redeemed during the first 12 months. Class R and Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors.
The investment objective of the Fund is to seek 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 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 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 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).
24
Table of Contents
Federal and Foreign Income Taxes – No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken for all open federal income tax years (Oct. 31, 2010–Oct. 31, 2013), and has concluded that no provision for federal income tax is required in the Fund’s financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries it invests in that may date back to the inception of the Fund.
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, 2014.
Foreign Currency Transactions – Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Fund’s prospectus. The value of all assets and liabilities denominated in foreign currencies is translated daily into U.S. dollars at the exchange rate of such currencies against the U.S. dollar. Transaction gains or losses resulting from 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.
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.
25
Table of Contents
Notes to financial statements | ||||
Delaware Global Real Estate Opportunities Fund | ||||
1. Significant Accounting Policies (continued) |
Other – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated among such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The financial statements reflect an estimate of the reclassification of the distribution character. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all tax withholdings, a portion of which may be reclaimable. Withholding taxes and reclaims on foreign dividends have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. The Fund declares and pays distributions from net investment income quarterly 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 may be used to offset custody fees. There were no earnings credits for the six months ended April 30, 2014.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than one dollar, the expense paid under this arrangement is included in dividend disbursing and transfer agent fees and expenses and appears on the statement of operations with the corresponding expense offset shown as “expense paid indirectly.” For the six months ended April 30, 2014, the Fund earned $8 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.
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 fund operating expenses (excluding any 12b-1 fees, taxes, interest, inverse floater program expenses, short sale and dividend interest expenses, brokerage fees, certain insurance costs, acquired fund fees and expenses, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder
26
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meetings, and liquidations (collectively nonroutine expenses)) do not exceed 1.15% of the Fund’s average daily net assets from Nov. 1, 2013 through April 30, 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 may only be terminated by agreement of DMC and 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, 2014, the Fund was charged $1,236 for these services.
DSC is also the transfer agent and dividend disbursing agent of the Fund. The Fund pays DSC fees based on the aggregate daily net assets of the retail funds within the Delaware Investments Family of Funds at the following annual rate: 0.025% of the first $20 billion; 0.020% of the next $5 billion; 0.015% of the next $5 billion; and 0.013% of average daily net assets in excess of $30 billion. This amount is included in the statement of operations as dividend disbursing and transfer agent fees and expenses. For the six months ended April 30, 2014, the amount charged by DSC was $5,627. Pursuant to a sub-transfer agency agreement between DSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are passed on to and paid directly by the Fund.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual distribution and service fee of 0.25% of the average daily net assets of the Class A shares, 1.00% of the average daily net assets of the Class C shares, and 0.50% of the average daily net assets of the Class R shares, respectively. Institutional Class shares pay no distribution and service expenses.
As provided in the investment management agreement, the Fund bears a portion of the cost of resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended April 30, 2014, the Fund was charged $776 for internal legal, tax, and regulatory services provided by DMC and/or its affiliates’ employees.
*The contractual waiver period is Feb. 28, 2013 to Feb. 27, 2015
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Notes to financial statements | ||||
Delaware Global Real Estate Opportunities Fund | ||||
2. Investment Management, Administration Agreements and Other Transactions with Affiliates (continued) |
For the six months ended April 30, 2014, DDLP earned $1,323 for commissions on sales of the Fund’s Class A shares. For the six months ended April 30, 2014, DDLP received gross CDSC commissions of $91 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, 2014, the Fund made purchases of $26,898,748 and sales of $31,701,280 of investment securities other than short-term investments.
At April 30, 2014, the cost of investments for federal income tax purposes has been estimated since final tax characteristics cannot be determined until fiscal year end. At April 30, 2014, the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments | $ | 46,075,055 | ||
|
| |||
Aggregate unrealized appreciation | $ | 4,387,412 | ||
Aggregate unrealized depreciation | (1,221,723 | ) | ||
|
| |||
Net unrealized appreciation | $ | 3,165,689 | ||
|
|
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, 2013* will expire as follows: $43,164,891 expires in 2016, $50,784,384 expires in 2017, and $3,400,957 expires in 2018.
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. 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.
*The amount of this loss which can be utilized in subsequent years may be subject to an annual limitation in accordance with the Internal Revenue Code due to the Fund merger with Delaware Global Real Estate Securities Fund on Sept. 28, 2012.
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U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below.
Level 1 | – | inputs are quoted prices in active markets for identical investments (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 Global Real Estate Opportunities Fund | ||||
3. Investments (continued) |
The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of April 30, 2014:
Level 1 | Level 2 | Total | ||||||||||
Convertible Bond | $ | — | $ | 562,664 | $ | 562,664 | ||||||
Common Stock | ||||||||||||
Australia | 4,222,635 | — | 4,222,635 | |||||||||
Canada | 1,126,635 | — | 1,126,635 | |||||||||
China/Hong Kong | 3,279,565 | — | 3,279,565 | |||||||||
France | 1,439,738 | — | 1,439,738 | |||||||||
Germany | 1,231,310 | — | 1,231,310 | |||||||||
Italy | 339,439 | — | 339,439 | |||||||||
Japan | 4,113,886 | — | 4,113,886 | |||||||||
Mexico | 375,645 | — | 375,645 | |||||||||
Netherlands | 324,784 | — | 324,784 | |||||||||
Singapore | 1,202,260 | — | 1,202,260 | |||||||||
Spain | 491,059 | — | 491,059 | |||||||||
Sweden | 925,149 | — | 925,149 | |||||||||
United Kingdom | 3,293,183 | — | 3,293,183 | |||||||||
United States | 25,811,837 | — | 25,811,837 | |||||||||
Warrant | 4,492 | — | 4,492 | |||||||||
Short-Term Investments | — | 496,463 | 496,463 | |||||||||
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| |||||||
Total | $ | 48,181,617 | $ | 1,059,127 | $ | 49,240,744 | ||||||
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| |||||||
Foreign Currency Exchange Contracts | $ | — | $ | (2,831 | ) | $ | (2,831 | ) |
The securities that have been deemed worthless on the schedule of investments are considered to be Level 3 investments in this table.
During the six months ended April 30, 2014, 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 of securities in the Fund occurs when market volatility exceeds an established rolling threshold. If the threshold is exceeded on a given date, then prices of international securities (those that traded on exchanges that close at a different time than the time that the Fund’s Net Asset Value is determined) will be established using a separate pricing feed from a third party vendor designed to establish a price for each security as of the time that the Fund’s Net Asset Value is determined. Further, international fair value pricing uses other observable market-based inputs in place of the closing exchange price due to the events occurring after the close of the exchange or market on which the investment is principally traded, causing a change in the classification between levels. The Fund’s policy is to recognize transfers between levels at the beginning of the reporting period.
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A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of 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.
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended 4/30/14 | Year ended 10/31/13 | |||||||||
Shares sold: | ||||||||||
Class A | 498,474 | 760,881 | ||||||||
Class C | 136,520 | 82,306 | ||||||||
Class R | 4,241 | 2,408 | ||||||||
Institutional Class | 657,387 | 917,597 | ||||||||
Shares issued upon reinvestment of dividends and distributions: | ||||||||||
Class A | 16,390 | 6,032 | ||||||||
Class C | 2,636 | 168 | ||||||||
Class R | 91 | 33 | ||||||||
Institutional Class | 30,881 | 331,969 | ||||||||
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| |||||||
1,346,620 | 2,101,394 | |||||||||
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Shares redeemed: | ||||||||||
Class A | (174,436 | ) | (163,649 | ) | ||||||
Class C | (11,090 | ) | (513 | ) | ||||||
Class R | (2 | ) | — | |||||||
Institutional Class | (1,903,896 | ) | (6,441,084 | ) | ||||||
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| |||||||
(2,089,424 | ) | (6,605,246 | ) | |||||||
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| |||||||
Net decrease | (742,804 | ) | (4,503,852 | ) | ||||||
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|
5. 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 of 0.08%, 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. 12, 2013.
On Nov. 12, 2013, the Fund, along with the other Participants, entered into an amendment to the agreement for a $225,000,000 revolving line of credit. The line of credit is to be used as described above
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Notes to financial statements | ||||
Delaware Global Real Estate Opportunities Fund |
5. Line of Credit (continued)
and operates in substantially the same manner as the original agreement. The line of credit available under the agreement will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of April 30, 2014 or at any time during the period then ended.
6. Offsetting
In December 2011, the Financial Accounting Standards Board (FASB) issued guidance that expands current disclosure requirements on the offsetting of certain assets and liabilities. The new disclosures are required for investments and derivative financial instruments subject to master netting or similar agreements which are eligible for offset in the statement of assets and liabilities and require an entity to disclose both gross and net information about such investments and transactions in the financial statements. In January 2013, the FASB issued guidance that clarifies which investments and transactions are subject to the offsetting disclosure requirements. The scope of the disclosure requirements for offsetting is limited to derivative instruments, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions. The guidance is effective for financial statements with fiscal years beginning on or after Jan. 1, 2013, and interim periods within those fiscal years. The Fund adopted the disclosure provisions on offsetting during the current reporting period.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs over-the-counter (OTC) derivatives and foreign exchange contracts and typically contains, among other things, collateral posting items and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) netting including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency, or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
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At April 30, 2014, the Fund had the following assets and liabilities subject to offsetting provisions:
Offsetting of Financial Assets and Liabilities and Derivative Assets and Liabilities
Counterparty | Gross Value of Derivative Asset | Gross Value of Derivative Liability | Net Position | |||
BNY Mellon | $— | $(2,831) | $(2,831) |
Counterparty | Net Position | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Fair Value of Non-Cash Collateral Pledged | Cash Collateral Pledged | Net Amount(a) | ||||||
BNY Mellon | $(2,831) | $— | $— | $— | $— | $(2,831) |
Master Repurchase Agreements
Counterparty | Repurchase Agreements | Fair Value of Non-Cash Collateral Received | Cash Collateral Received | Net Amount(a) | ||||||||||||||||
Bank of America Merrill Lynch | $ | 71,982 | $ | (71,982 | ) | $ | — | $ | — | |||||||||||
Bank of Montreal | 23,994 | (23,994 | ) | — | — | |||||||||||||||
BNP Paribas | 281,024 | (281,024 | ) | — | — | |||||||||||||||
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Total | $ | 377,000 | $ | (377,000 | ) | $ | — | $ | — | |||||||||||
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(a)Net represents the net receivable/(payable) that would be due from/(to) the counterparty in an event of default.
7. Derivatives
U.S. GAAP requires disclosures that enable investors to understand: (1) how and why an entity uses derivatives; (2) how they are accounted for; and (3) how they affect an entity’s results of operations and financial position.
Foreign Currency Exchange Contracts – The Fund may enter into foreign currency exchange contracts and foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The Fund may also 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. In addition, the Fund may enter into these contracts to facilitate or expedite the settlement of portfolio transactions. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts and foreign cross currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged
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Notes to financial statements | ||||
Delaware Global Real Estate Opportunities Fund |
7. Derivatives (continued)
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 page 12 for the realized and unrealized gain or loss on derivatives.
During the six months ended April 30, 2014, the Fund entered into foreign currency exchange contracts to facilitate or expedite the settlement of portfolio transactions.
Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended April 30, 2014:
Long Derivative Volume | Short Derivative Volume | |||||||||||
Foreign currency exchange contracts (average cost) | USD | 174,410 | USD | 132,565 |
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: (1) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day may be more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellon’s securities lending program. The Collective Trust may invest in U.S. government securities and high-quality corporate debt, asset-backed and other money market securities, and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned
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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. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
At April 30, 2014, the Fund had no securities out on loan.
9. 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.
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Notes to financial statements | ||||
Delaware Global Real Estate Opportunities Fund |
9. Credit and Market Risk (continued)
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund’s Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. Rule 144A securities and illiquid securities have been identified in the schedule of investments.
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, 2014 that would require recognition or disclosure in the Fund’s financial statements.
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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 Private Investor Rosemont, PA | Joseph W. Chow Former Executive Vice President State Street Corporation Brookline, MA
John A. Fry President Drexel University Philadelphia, PA | Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. Philadelphia, PA
Frances A. Sevilla-Sacasa Chief Executive Officer Banco Itaú International Miami, FL | Thomas K. Whitford Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Janet L. Yeomans Former Vice President and Treasurer 3M Corporation St. Paul, MN
J. Richard Zecher Founder Investor Analytics Scottsdale, AZ | |||
Affiliated officers | ||||||
David F. Connor Senior Vice President, Deputy General Counsel, and Secretary Delaware Investments Family of Funds Philadelphia, PA | Daniel V. Geatens Vice President and Treasurer Delaware Investments Family of Funds Philadelphia, PA | 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 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.
DELAWARE GROUP® ADVISER FUNDS
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | July 2, 2014 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | July 2, 2014 |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | July 2, 2014 |