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: | 811-00750 |
Exact name of registrant as specified in charter: | Delaware Group® Equity Funds II |
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 | |
Registrants telephone number, including area code: | (800) 523-1918 |
Date of fiscal year end: | November 30 |
Date of reporting period: | May 31, 2014 |
Item 1. Reports to Stockholders
Semiannual report
U.S. value equity mutual fund
Delaware Value® Fund
May 31, 2014
Carefully consider the Funds investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Funds 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 Value® Fund at delawareinvestments.com.
For the six-month period from December 1, 2013 to May 31, 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 Dec. 1, 2013 to May 31, 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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 Funds 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 December 1, 2013 to May 31, 2014 (Unaudited)
Delaware Value® Fund
Expense analysis of an investment of $1,000
Beginning | Ending | Expenses | ||||||
Account Value | Account Value | Annualized | Paid During Period | |||||
12/1/13 | 5/31/14 | Expense Ratio | 12/1/13 to 5/31/14* | |||||
Actual Fund return |
||||||||
Class A |
$1,000.00 | $1,079.80 | 0.97% | $5.03 | ||||
Class B |
1,000.00 | 1,079.30 | 0.98% | 5.08 | ||||
Class C |
1,000.00 | 1,076.00 | 1.73% | 8.95 | ||||
Class R |
1,000.00 | 1,077.90 | 1.23% | 6.37 | ||||
Institutional Class |
1,000.00 | 1,081.10 | 0.73% | 3.79 | ||||
Hypothetical 5% return (5% return before expenses) |
||||||||
Class A |
$1,000.00 | $1,020.09 | 0.97% | $4.89 | ||||
Class B |
1,000.00 | 1,020.04 | 0.98% | 4.94 | ||||
Class C |
1,000.00 | 1,016.31 | 1.73% | 8.70 | ||||
Class R |
1,000.00 | 1,018.80 | 1.23% | 6.19 | ||||
Institutional Class |
1,000.00 | 1,021.29 | 0.73% | 3.68 |
* | Expenses Paid During Period are equal to the Funds annualized expense ratio, multiplied by the average account value over the period, multiplied by 182/365 (to reflect the one-half year period). |
| Because actual returns reflect only the most recent six-month period, the returns shown may differ significantly from fiscal year returns. |
2
Security type / sector allocation and top 10 equity holdings | ||
Delaware Value® Fund | As of May 31, 2014 (Unaudited) |
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment managers internal sector classifications, which may result in the sector designations for one fund being different than another funds sector designations.
Security type / sector | Percentage of net assets | |
| ||
Common Stock |
97.17% | |
Consumer Discretionary |
6.07% | |
Consumer Staples |
11.93% | |
Energy |
15.11% | |
Financials |
11.73% | |
Healthcare |
18.03% | |
Industrials |
8.79% | |
Information Technology |
13.67% | |
Materials |
2.95% | |
Telecommunications |
5.94% | |
Utilities |
2.95% | |
Short-Term Investments |
2.34% | |
Total Value of Securities |
99.51% | |
Receivables and Other Assets Net of Liabilities |
0.49% | |
Total Net Assets |
100.00% |
Holdings are for informational purposes only and are subject to change at any time. They are not a recommendation to buy, sell, or hold any security.
Top 10 equity holdings | Percentage of net assets | |
| ||
ConocoPhillips |
3.14% | |
Cisco Systems |
3.10% | |
Johnson Controls |
3.09% | |
Broadcom Class A |
3.08% | |
Cardinal Health |
3.08% | |
Halliburton |
3.05% | |
Quest Diagnostics |
3.05% | |
Intel |
3.05% | |
Xerox |
3.04% | |
CVS Caremark
|
3.01%
|
3
Schedule of investments | ||
Delaware Value® Fund | May 31, 2014 (Unaudited) |
Number of shares |
Value (U.S. $) | |||||||
|
||||||||
Common Stock 97.17% |
||||||||
|
||||||||
Consumer Discretionary 6.07% |
||||||||
Johnson Controls |
3,257,300 | $ | 157,523,028 | |||||
Lowes |
3,232,200 | 152,171,976 | ||||||
|
|
|||||||
309,695,004 | ||||||||
|
|
|||||||
Consumer Staples 11.93% |
||||||||
Archer-Daniels-Midland |
3,409,500 | 153,222,930 | ||||||
CVS Caremark |
1,960,771 | 153,567,585 | ||||||
Kraft Foods Group |
2,547,120 | 151,451,755 | ||||||
Mondelez International Class A |
3,999,661 | 150,467,247 | ||||||
|
|
|||||||
608,709,517 | ||||||||
|
|
|||||||
Energy 15.11% |
||||||||
Chevron |
1,228,739 | 150,876,862 | ||||||
ConocoPhillips |
2,001,200 | 159,975,928 | ||||||
Halliburton |
2,411,400 | 155,872,896 | ||||||
Marathon Oil |
4,140,590 | 151,794,029 | ||||||
Occidental Petroleum |
1,526,400 | 152,166,816 | ||||||
|
|
|||||||
770,686,531 | ||||||||
|
|
|||||||
Financials 11.73% |
||||||||
Allstate |
2,514,352 | 146,486,148 | ||||||
Bank of New York Mellon |
4,345,200 | 150,170,112 | ||||||
BB&T |
3,987,900 | 151,221,168 | ||||||
Marsh & McLennan |
2,993,649 | 150,490,735 | ||||||
|
|
|||||||
598,368,163 | ||||||||
|
|
|||||||
Healthcare 18.03% |
||||||||
Baxter International |
2,027,800 | 150,888,598 | ||||||
Cardinal Health |
2,226,500 | 157,257,695 | ||||||
Johnson & Johnson |
1,507,856 | 152,987,070 | ||||||
Merck |
2,633,940 | 152,399,768 | ||||||
Pfizer |
5,103,200 | 151,207,816 | ||||||
Quest Diagnostics |
2,595,400 | 155,438,506 | ||||||
|
|
|||||||
920,179,453 | ||||||||
|
|
|||||||
Industrials 8.79% |
||||||||
Northrop Grumman |
1,218,509 | 148,109,769 | ||||||
Raytheon |
1,518,500 | 148,160,045 | ||||||
Waste Management |
3,401,690 | 151,987,509 | ||||||
|
|
|||||||
448,257,323 | ||||||||
|
|
|||||||
Information Technology 13.67% |
||||||||
Broadcom Class A |
4,936,400 | 157,323,068 | ||||||
Cisco Systems |
6,423,500 | 158,146,570 | ||||||
Intel |
5,688,100 | 155,398,892 |
4
Number of shares |
Value (U.S. $) | |||||||
|
||||||||
Common Stock (continued) |
||||||||
|
||||||||
Information Technology (continued) |
||||||||
Motorola Solutions |
1,064,605 | $ | 71,775,669 | |||||
Xerox |
12,555,400 | 155,059,190 | ||||||
|
|
|||||||
697,703,389 | ||||||||
|
|
|||||||
Materials 2.95% |
||||||||
duPont (E.I.) deNemours |
2,169,300 | 150,354,183 | ||||||
|
|
|||||||
150,354,183 | ||||||||
|
|
|||||||
Telecommunications 5.94% |
||||||||
AT&T |
4,225,400 | 149,874,938 | ||||||
Verizon Communications |
3,068,800 | 153,317,248 | ||||||
|
|
|||||||
303,192,186 | ||||||||
|
|
|||||||
Utilities 2.95% |
||||||||
Edison International |
2,731,051 | 150,590,152 | ||||||
|
|
|||||||
150,590,152 | ||||||||
|
|
|||||||
Total Common Stock (cost $3,771,927,649) |
4,957,735,901 | |||||||
|
|
|||||||
Principal amount° | ||||||||
|
||||||||
Short-Term Investments 2.34% |
||||||||
|
||||||||
Discount Notes 0.96% |
||||||||
Federal Home Loan Bank |
||||||||
0.04% 6/18/14 |
30,225,993 | 30,225,721 | ||||||
0.05% 7/28/14 |
8,440,223 | 8,440,020 | ||||||
0.05% 8/15/14 |
4,325,250 | 4,324,982 | ||||||
0.075% 11/19/14 |
5,804,888 | 5,803,246 | ||||||
|
|
|||||||
48,793,969 | ||||||||
|
|
|||||||
Repurchase Agreements 1.33% |
||||||||
Bank of America Merrill Lynch |
22,276,482 | 22,276,482 | ||||||
BNP Paribas |
45,646,518 | 45,646,518 | ||||||
|
|
|||||||
67,923,000 | ||||||||
|
|
|||||||
U.S. Treasury Obligation 0.05% |
||||||||
U.S. Treasury Bill 0.093% 11/13/14 |
2,728,672 | 2,728,096 | ||||||
|
|
|||||||
2,728,096 | ||||||||
|
|
|||||||
Total Short-Term Investments (cost $119,443,112) |
119,445,065 | |||||||
|
|
5
Schedule of investments
Delaware Value® Fund
Total Value of Securities 99.51% |
$ | 5,077,180,966 | ||||
|
|
| 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. |
See accompanying notes, which are an integral part of the financial statements.
6
This page intentionally left blank.
Statement of assets and liabilities | ||
Delaware Value® Fund | May 31, 2014 (Unaudited) |
Assets: |
||||
Investments, at value1 |
$ | 4,957,735,901 | ||
Short-term investments, at value2 |
119,445,065 | |||
Cash |
1,149 | |||
Receivable for fund shares sold |
17,965,536 | |||
Receivables for securities sold |
12,518,695 | |||
Dividends and interest receivable |
11,698,891 | |||
|
|
|||
Total assets |
5,119,365,237 | |||
|
|
|||
Liabilities: |
||||
Payable for securities purchased |
9,231,012 | |||
Payable for fund shares redeemed |
3,739,212 | |||
Income distribution payable |
1,364 | |||
Investment management fees payable |
2,263,668 | |||
Other accrued expenses |
1,017,251 | |||
Distribution fees payable to affiliates |
630,994 | |||
Other affiliates payable |
162,048 | |||
Trustees fees and expenses payable |
29,862 | |||
|
|
|||
Total liabilities |
17,075,411 | |||
|
|
|||
Total Net Assets |
$ | 5,102,289,826 | ||
|
|
|||
Net Assets Consist of: |
||||
Paid-in capital |
$ | 4,050,571,134 | ||
Undistributed net investment income |
12,813,114 | |||
Accumulated net realized loss on investments |
(146,904,627 | ) | ||
Net unrealized appreciation of investments |
1,185,810,205 | |||
|
|
|||
Total Net Assets |
$ | 5,102,289,826 | ||
|
|
|||
1 Investments, at cost |
$ | 3,771,927,649 | ||
2 Short-term investments, at cost |
119,443,112 |
8
Net Asset Value |
||||
Class A: |
||||
Net assets |
$ | 1,962,601,967 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
113,975,166 | |||
Net asset value per share |
$ | 17.22 | ||
Sales charge |
5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 sales charge) |
$ | 18.27 | ||
Class B: |
||||
Net assets |
$ | 3,341,017 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
194,532 | |||
Net asset value per share |
$ | 17.17 | ||
Class C: |
||||
Net assets |
$ | 269,398,549 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
15,688,273 | |||
Net asset value per share |
$ | 17.17 | ||
Class R: |
||||
Net assets |
$ | 21,637,844 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
1,257,768 | |||
Net asset value per share |
$ | 17.20 | ||
Institutional Class: |
||||
Net assets |
$ | 2,845,310,449 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
165,216,309 | |||
Net asset value per share |
$ | 17.22 |
See accompanying notes, which are an integral part of the financial statements.
9
Statement of operations | ||
Delaware Value® Fund | Six months ended May 31, 2014 (Unaudited) |
Investment Income: |
||||
Dividends |
$ | 57,137,339 | ||
Interest |
11,264 | |||
|
|
|||
57,148,603 | ||||
|
|
|||
Expenses: |
||||
Management fees |
12,059,121 | |||
Distribution expenses Class A |
2,200,135 | |||
Distribution expenses Class B |
18,359 | |||
Distribution expenses Class C |
1,147,767 | |||
Distribution expenses Class R |
39,700 | |||
Dividend disbursing and transfer agent fees and expenses |
2,746,313 | |||
Accounting and administration expenses |
765,226 | |||
Reports and statements to shareholders |
153,140 | |||
Registration fees |
152,560 | |||
Legal fees |
114,198 | |||
Trustees fees and expenses |
108,485 | |||
Custodian fees |
75,608 | |||
Audit and tax |
20,546 | |||
Other |
51,416 | |||
|
|
|||
19,652,574 | ||||
Less waived distribution expenses Class B |
(13,769 | ) | ||
Less expense paid indirectly |
(1,742 | ) | ||
|
|
|||
Total operating expenses |
19,637,063 | |||
|
|
|||
Net Investment Income |
37,511,540 | |||
|
|
|||
Net Realized and Unrealized Gain: |
||||
Net realized gain |
47,445,085 | |||
Net change in unrealized appreciation (depreciation) of investments |
278,576,909 | |||
|
|
|||
Net Realized and Unrealized Gain |
326,021,994 | |||
|
|
|||
Net Increase in Net Assets Resulting from Operations |
$ | 363,533,534 | ||
|
|
See accompanying notes, which are an integral part of the financial statements.
10
This page intentionally left blank.
Statements of changes in net assets
Delaware Value® Fund
Six months (Unaudited) |
Year ended 11/30/13 |
|||||||
Increase in Net Assets from Operations: |
||||||||
Net investment income |
$ | 37,511,540 | $ | 45,657,500 | ||||
Net realized gain |
47,445,085 | 44,229,661 | ||||||
Net change in unrealized appreciation (depreciation) |
278,576,909 | 642,413,105 | ||||||
|
|
|
|
|||||
Net increase in net assets resulting from operations |
363,533,534 | 732,300,266 | ||||||
|
|
|
|
|||||
Dividends and Distributions to Shareholders from: |
||||||||
Net investment income: |
||||||||
Class A |
(12,545,460 | ) | (28,315,408 | ) | ||||
Class B |
(22,270 | ) | (68,827 | ) | ||||
Class C |
(739,368 | ) | (1,267,433 | ) | ||||
Class R |
(86,605 | ) | (131,124 | ) | ||||
Institutional Class |
(19,000,692 | ) | (30,162,418 | ) | ||||
|
|
|
|
|||||
(32,394,395 | ) | (59,945,210 | ) | |||||
|
|
|
|
|||||
Capital Share Transactions: |
||||||||
Proceeds from shares sold: |
||||||||
Class A |
415,527,982 | 562,913,489 | ||||||
Class B |
15,245 | 46,164 | ||||||
Class C |
65,678,924 | 111,193,912 | ||||||
Class R |
11,616,697 | 5,958,002 | ||||||
Institutional Class |
795,830,797 | 1,255,428,108 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
11,995,667 | 26,847,286 | ||||||
Class B |
21,645 | 65,539 | ||||||
Class C |
681,159 | 1,180,177 | ||||||
Class R |
85,233 | 131,123 | ||||||
Institutional Class |
18,436,523 | 29,453,189 | ||||||
|
|
|
|
|||||
1,319,889,872 | 1,993,216,989 | |||||||
|
|
|
|
12
Six months ended 5/31/14 (Unaudited) |
Year ended 11/30/13 |
|||||||
Capital Share Transactions (continued): |
||||||||
Cost of shares redeemed: |
||||||||
Class A |
$ | (295,302,922 | ) | $ | (191,842,612 | ) | ||
Class B |
(1,393,543 | ) | (3,864,053 | ) | ||||
Class C |
(14,160,871 | ) | (17,768,660 | ) | ||||
Class R |
(3,044,989 | ) | (1,510,577 | ) | ||||
Institutional Class |
(222,590,369 | ) | (261,854,509 | ) | ||||
|
|
|
|
|||||
(536,492,694 | ) | (476,840,411 | ) | |||||
|
|
|
|
|||||
Increase in net assets derived from capital share transactions |
783,397,178 | 1,516,376,578 | ||||||
|
|
|
|
|||||
Net Increase in Net Assets |
1,114,536,317 | 2,188,731,634 | ||||||
Net Assets: |
||||||||
Beginning of period |
3,987,753,509 | 1,799,021,875 | ||||||
|
|
|
|
|||||
End of period (including undistributed net investment income |
$ | 5,102,289,826 | $ | 3,987,753,509 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
13
Delaware Value® Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
| ||
Net asset value, beginning of period |
||
Income from investment operations: |
||
Net investment income2 |
||
Net realized and unrealized gain |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets |
||
Ratio of expenses to average net assets prior to fees waived |
||
Ratio of net investment income to average net assets |
||
Ratio of net investment income to average net assets prior to fees waived |
||
Portfolio turnover |
||
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during 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.
14
Six months ended | ||||||||||||||||||||||||||||||||||||
5/31/141 | Year ended | |||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
$ | 16.060 | $ | 12.440 | $ | 10.970 | $ | 9.820 | $ | 9.100 | $ | 7.760 | |||||||||||||||||||||||||
0.131 | 0.233 | 0.225 | 0.190 | 0.171 | 0.205 | |||||||||||||||||||||||||||||||
1.143 | 3.728 | 1.439 | 1.139 | 0.738 | 1.389 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
1.274 | 3.961 | 1.664 | 1.329 | 0.909 | 1.594 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.114 | ) | (0.341 | ) | (0.194 | ) | (0.179 | ) | (0.189 | ) | (0.254 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.114 | ) | (0.341 | ) | (0.194 | ) | (0.179 | ) | (0.189 | ) | (0.254 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
$ | 17.220 | $ | 16.060 | $ | 12.440 | $ | 10.970 | $ | 9.820 | $ | 9.100 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
7.98% | 32.41% | 15.40% | 13.65% | 10.16% | 21.21% | |||||||||||||||||||||||||||||||
$ | 1,962,602 | $ | 1,699,105 | $ | 988,578 | $ | 274,050 | $ | 298,110 | $ | 302,849 | |||||||||||||||||||||||||
0.97% | 1.01% | 1.09% | 1.10% | 1.10% | 1.07% | |||||||||||||||||||||||||||||||
0.97% | 1.06% | 1.17% | 1.30% | 1.32% | 1.37% | |||||||||||||||||||||||||||||||
1.61% | 1.61% | 1.89% | 1.78% | 1.85% | 2.60% | |||||||||||||||||||||||||||||||
1.61% | 1.66% | 1.81% | 1.58% | 1.63% | 2.30% | |||||||||||||||||||||||||||||||
6% | 6% | 13% | 24% | 29% | 27% | |||||||||||||||||||||||||||||||
|
15
Financial highlights
Delaware Value® 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 from investment operations: |
||
Net investment income2 |
||
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 prior to fees waived |
||
Ratio of net investment income to average net assets |
||
Ratio of net investment income to average net assets prior to fees waived |
||
Portfolio turnover |
||
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during all of the periods shown reflects 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.
16
Six months ended | ||||||||||||||||||||||||||||||||||||
5/31/141 | Year ended | |||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
$ | 16.010 | $ | 12.330 | $ | 10.880 | $ | 9.740 | $ | 9.050 | $ | 7.690 | |||||||||||||||||||||||||
0.129 | 0.129 | 0.133 | 0.109 | 0.101 | 0.146 | |||||||||||||||||||||||||||||||
1.135 | 3.720 | 1.431 | 1.141 | 0.719 | 1.391 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
1.264 | 3.849 | 1.564 | 1.250 | 0.820 | 1.537 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.104) | (0.169 | ) | (0.114 | ) | (0.110 | ) | (0.130 | ) | (0.177 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.104) | (0.169 | ) | (0.114 | ) | (0.110 | ) | (0.130 | ) | (0.177 | ) | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
$ | 17.170 | $ | 16.010 | $ | 12.330 | $ | 10.880 | $ | 9.740 | $ | 9.050 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
7.93% | 31.48% | 14.51% | 12.90% | 9.16% | 20.44% | |||||||||||||||||||||||||||||||
$ | 3,341 | $ | 4,455 | $ | 6,720 | $ | 2,130 | $ | 2,513 | $ | 2,930 | |||||||||||||||||||||||||
0.98% | 1.72% | 1.85% | 1.85% | 1.85% | 1.82% | |||||||||||||||||||||||||||||||
1.73% | 1.77% | 1.88% | 2.00% | 2.02% | 2.07% | |||||||||||||||||||||||||||||||
1.60% | 0.92% | 1.13% | 1.03% | 1.10% | 1.85% | |||||||||||||||||||||||||||||||
0.85% | 0.87% | 1.10% | 0.88% | 0.93% | 1.60% | |||||||||||||||||||||||||||||||
6% | 6% | 13% | 24% | 29% | 27% | |||||||||||||||||||||||||||||||
|
17
Financial highlights
Delaware Value® Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
| ||
Net asset value, beginning of period |
||
Income from investment operations: |
||
Net investment income2 |
||
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 prior to fees waived |
||
Ratio of net investment income to average net assets |
||
Ratio of net investment income to average net assets prior to fees waived |
||
Portfolio turnover |
||
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. Total investment return during 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.
18
Six months ended | ||||||||||||||||||||||||||||||||||||
5/31/141 | Year ended | |||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
$ | 16.010 | $ | 12.340 | $ | 10.890 | $ | 9.750 | $ | 9.050 | $ | 7.690 | |||||||||||||||||||||||||
0.069 | 0.126 | 0.134 | 0.109 | 0.101 | 0.146 | |||||||||||||||||||||||||||||||
1.144 | 3.713 | 1.430 | 1.141 | 0.729 | 1.391 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
1.213 | 3.839 | 1.564 | 1.250 | 0.830 | 1.537 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.053 | ) | (0.169 | ) | (0.114 | ) | (0.110 | ) | (0.130 | ) | (0.177 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.053 | ) | (0.169 | ) | (0.114 | ) | (0.110 | ) | (0.130 | ) | (0.177 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
$ | 17.170 | $ | 16.010 | $ | 12.340 | $ | 10.890 | $ | 9.750 | $ | 9.050 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
7.60% | 31.38% | 14.49% | 12.88% | 9.28% | 20.28% | |||||||||||||||||||||||||||||||
$ | 269,399 | $ | 199,771 | $ | 74,407 | $ | 24,928 | $ | 19,377 | $ | 23,925 | |||||||||||||||||||||||||
1.73% | 1.77% | 1.85% | 1.85% | 1.85% | 1.82% | |||||||||||||||||||||||||||||||
1.73% | 1.77% | 1.88% | 2.00% | 2.02% | 2.07% | |||||||||||||||||||||||||||||||
0.85% | 0.87% | 1.13% | 1.03% | 1.10% | 1.85% | |||||||||||||||||||||||||||||||
0.85% | 0.87% | 1.10% | 0.88% | 0.93% | 1.60% | |||||||||||||||||||||||||||||||
6% | 6% | 13% | 24% | 29% | 27% | |||||||||||||||||||||||||||||||
|
19
Financial highlights
Delaware Value® Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
|
| |
Net asset value, beginning of period |
||
Income from investment operations: |
||
Net investment income2 |
||
Net realized and unrealized gain |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets |
||
Ratio of expenses to average net assets prior to fees waived |
||
Ratio of net investment income to average net assets |
||
Ratio of net investment income to average net assets prior to fees waived |
||
Portfolio turnover |
||
|
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during 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.
20
Six months ended | ||||||||||||||||||||||||||||||||||||
5/31/141 | Year ended | |||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
$ | 16.050 | $ | 12.400 | $ | 10.950 | $ | 9.800 | $ | 9.090 | $ | 7.740 | |||||||||||||||||||||||||
0.110 | 0.197 | 0.194 | 0.163 | 0.148 | 0.185 | |||||||||||||||||||||||||||||||
1.134 | 3.735 | 1.423 | 1.143 | 0.731 | 1.393 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
1.244 | 3.932 | 1.617 | 1.306 | 0.879 | 1.578 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.094 | ) | (0.282 | ) | (0.167 | ) | (0.156 | ) | (0.169 | ) | (0.228 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.094 | ) | (0.282 | ) | (0.167 | ) | (0.156 | ) | (0.169 | ) | (0.228 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
$ | 17.200 | $ | 16.050 | $ | 12.400 | $ | 10.950 | $ | 9.800 | $ | 9.090 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
7.79% | 32.17% | 14.96% | 13.43% | 9.81% | 20.98% | |||||||||||||||||||||||||||||||
$ | 21,638 | $ | 11,658 | $ | 5,219 | $ | 1,944 | $ | 1,816 | $ | 1,957 | |||||||||||||||||||||||||
1.23% | 1.27% | 1.35% | 1.35% | 1.35% | 1.32% | |||||||||||||||||||||||||||||||
1.23% | 1.35% | 1.48% | 1.60% | 1.62% | 1.67% | |||||||||||||||||||||||||||||||
1.35% | 1.37% | 1.63% | 1.53% | 1.60% | 2.35% | |||||||||||||||||||||||||||||||
1.35% | 1.29% | 1.50% | 1.28% | 1.33% | 2.00% | |||||||||||||||||||||||||||||||
6% | 6% | 13% | 24% | 29% | 27% | |||||||||||||||||||||||||||||||
|
21
Financial highlights
Delaware Value® Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
| ||
Net asset value, beginning of period |
||
Income from investment operations: |
||
Net investment income2 |
||
Net realized and unrealized gain |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets |
||
Ratio of expenses to average net assets prior to fees waived |
||
Ratio of net investment income to average net assets |
||
Ratio of net investment income to average net assets prior to fees waived |
||
Portfolio turnover |
||
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total investment return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. Total investment return during 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
Six months ended | ||||||||||||||||||||||||||||||||||||
5/31/141 | Year ended | |||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/13 | 11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | |||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
$ | 16.060 | $ | 12.460 | $ | 10.990 | $ | 9.830 | $ | 9.110 | $ | 7.770 | |||||||||||||||||||||||||
0.151 | 0.272 | 0.254 | 0.216 | 0.194 | 0.225 | |||||||||||||||||||||||||||||||
1.143 | 3.724 | 1.437 | 1.146 | 0.735 | 1.394 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
1.294 | 3.996 | 1.691 | 1.362 | 0.929 | 1.619 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.134 | ) | (0.396 | ) | (0.221 | ) | (0.202 | ) | (0.209 | ) | (0.279 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
(0.134 | ) | (0.396 | ) | (0.221 | ) | (0.202 | ) | (0.209 | ) | (0.279 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
$ | 17.220 | $ | 16.060 | $ | 12.460 | $ | 10.990 | $ | 9.830 | $ | 9.110 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
8.11% | 32.73% | 15.66% | 13.99% | 10.39% | 21.43% | |||||||||||||||||||||||||||||||
$ | 2,845,310 | $ | 2,072,765 | $ | 724,098 | $ | 216,345 | $ | 106,001 | $ | 80,373 | |||||||||||||||||||||||||
0.73% | 0.77% | 0.85% | 0.85% | 0.85% | 0.82% | |||||||||||||||||||||||||||||||
0.73% | 0.77% | 0.88% | 1.00% | 1.02% | 1.07% | |||||||||||||||||||||||||||||||
1.85% | 1.87% | 2.13% | 2.03% | 2.10% | 2.85% | |||||||||||||||||||||||||||||||
1.85% | 1.87% | 2.10% | 1.88% | 1.93% | 2.60% | |||||||||||||||||||||||||||||||
6% | 6% | 13% | 24% | 29% | 27% | |||||||||||||||||||||||||||||||
|
23
Notes to financial statements | ||
Delaware Value® Fund | May 31, 2014 (Unaudited) |
Delaware Group® Equity Funds II (Trust) is organized as a Delaware statutory trust and offers one series: Delaware Value Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, 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 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 only be purchased through dividend reinvestment and certain permitted exchanges. Prior to June 1, 2007, Class B shares were sold with a CDSC that declined from 4.00% to zero depending upon the period of time the shares are 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.
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. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. 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 Funds Board of Trustees (Board).
Federal Income Taxes No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Funds 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 Funds tax positions taken for all open federal income tax years (Nov. 30, 2010 Nov. 30, 2013), and has concluded that no provision for federal income tax is required in the Funds financial statements.
Class Accounting Investment income, common expenses and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
24
Repurchase Agreements The Fund may purchase certain U.S. government securities subject to the counterpartys 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 Funds custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on May 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. 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. In general, best execution refers to many factors, including the price paid or received for a security, the commission charged, the promptness and reliability of execution, the confidentiality and placement accorded the order, and other factors affecting the overall benefit obtained by the Fund on the transaction. There were no commission rebates for the six months ended May 31, 2014.
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 May 31, 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 May 31, 2014, the Fund earned $1,742 under this agreement.
25
Notes to financial statements
Delaware Value® Fund
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust and the investment manager, an annual fee which is calculated daily at the rate of 0.65% on the first $500 million of average daily net assets of the Fund, 0.60% on the next $500 million, 0.55% on the next $1.5 billion, and 0.50% on average daily net assets in excess of $2.5 billion.
DMC had contractually agreed to waive that portion, if any, of its management fee and reimburse the Fund to the extent necessary to ensure that total annual operating expenses (excluding any 12b-1 plan expenses, 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 meetings, and liquidations (collectively, nonroutine expenses)) do not exceed 0.85% of average daily net assets of the Fund from Dec. 1, 2013 through March 28, 2014.* For purposes of this waiver and reimbursement, nonroutine expenses may also include such additional costs and expenses as may be agreed upon from time to time by the Funds Board and DMC. This expense waiver and reimbursement applies only to expenses paid directly by the Fund and may only be terminated by agreement of DMC and the Fund. As of March 29, 2014, this expense waiver and reimbursement was terminated by 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 May 31, 2014, the Fund was charged $106,621 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% 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 May 31, 2014, the amount charged by DSC was $485,128. 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 B and Class C shares and 0.50% of the average daily net assets of Class R shares. Institutional Class shares pay no distribution and service expenses. The Board has adopted a formula for calculating 12b-1 plan fees for the Funds Class A shares. The total 12b-1 fees to be paid by Class A shareholders of the Fund will be the sum of (i) 0.10%
26
of the average daily net assets representing shares that were acquired prior to May 2, 1994 and (ii) 0.25% of the average daily net assets representing shares that were acquired on or after May 2, 1994. All Class A shareholders will bear 12b-1 fees at the same rate, the blended rate, currently 0.24% of average daily net assets, based upon the allocation of the rates described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. DDLP has contracted to limit distribution and service fees from Dec. 1, 2013 through May 31, 2014** in order to prevent distribution and service fees of Class B shares from exceeding 0.25% of average daily net assets.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2014, the Fund was charged $63,987 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates employees.
For the six months ended May 31, 2014, DDLP earned $129,017 for commissions on sales of the Funds Class A shares. For the six months ended May 31, 2014, DDLP received gross CDSC commissions of $7 and $1,745 on redemptions of the Funds 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 Trustees 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 period was March 29, 2012 through March 28, 2014.
** The contractual period is Nov. 1, 2013 through March 30, 2015.
3. Investments
For the six months ended May 31, 2014, the Fund made purchases of $953,944,651 and sales of $257,786,147 of investment securities other than short-term investments.
At May 31, 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 May 31, 2014, the cost of investments and unrealized appreciation (depreciation) were as follows:
Cost of investments |
$ | 3,898,840,201 | ||
|
|
|||
Aggregate unrealized appreciation |
$ | 1,193,931,473 | ||
Aggregate unrealized depreciation |
(15,590,708 | ) | ||
|
|
|||
Net unrealized appreciation |
$ | 1,178,340,765 | ||
|
|
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforwards remaining at Nov. 30, 2013 will expire as follows: $68,765,470 expires in 2015, $92,538,046 expires in 2016, and $25,888,990 expires in 2017.
27
Notes to financial statements
Delaware Value® Fund
3. Investments (continued)
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 were generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
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 entitys 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 Funds investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized below.
Level 1 | | Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) | ||
Level 2 | | Other observable inputs, including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates), or other market-corroborated inputs. (Examples: debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing, broker-quoted securities, fair valued securities) | ||
Level 3 | | Significant unobservable inputs, including the Funds own assumptions used to determine the fair value of investments. (Examples: broker-quoted securities, fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity, and industry. The derived value of a Level 3
28
investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Funds investments by fair value hierarchy levels as of May 31, 2014:
Level 1 | Level 2 | Total | ||||||||||
Common Stock |
$ | 4,957,735,901 | $ | | $ | 4,957,735,901 | ||||||
Short-Term Investments |
| 119,445,065 | 119,445,065 | |||||||||
|
|
|
|
|
|
|||||||
Total |
$ | 4,957,735,901 | $ | 119,445,065 | $ | 5,077,180,966 | ||||||
|
|
|
|
|
|
During the six months ended May 31, 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 Funds policy is to recognize transfers between levels at the beginning of the reporting period.
At May 31, 2014, there were no Level 3 investments.
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended | Year ended | |||||||
5/31/14 | 11/30/13 | |||||||
Shares sold: |
||||||||
Class A |
25,466,763 | 37,771,238 | ||||||
Class B |
943 | 3,245 | ||||||
Class C |
4,040,280 | 7,641,906 | ||||||
Class R |
712,258 | 403,911 | ||||||
Institutional Class |
48,705,228 | 86,718,655 | ||||||
Shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
739,138 | 1,991,397 | ||||||
Class B |
1,337 | 4,949 | ||||||
Class C |
41,932 | 86,056 | ||||||
Class R |
5,243 | 9,653 | ||||||
Institutional Class |
1,136,022 | 2,147,097 | ||||||
|
|
|
|
|||||
80,849,144 | 136,778,107 | |||||||
|
|
|
|
29
Notes to financial statements
Delaware Value® Fund
4. Capital Shares (continued)
Six months ended | Year ended | |||||||
5/31/14 | 11/30/13 | |||||||
Shares redeemed: |
||||||||
Class A |
(18,035,443) | (13,439,562 | ) | |||||
Class B |
(86,036) | (275,129 | ) | |||||
Class C |
(868,415) | (1,283,917 | ) | |||||
Class R |
(186,328) | (107,716 | ) | |||||
Institutional Class |
(13,678,515) | (17,924,600 | ) | |||||
|
|
|
|
|||||
(32,854,737) | (33,030,924 | ) | ||||||
|
|
|
|
|||||
Net increase |
47,994,407 | 103,747,183 | ||||||
|
|
|
|
For the six months ended May 31, 2014 and year ended Nov. 30, 2013, 53,148 Class B shares were converted to 52,984 Class A shares valued at $860,671, and 152,372 Class B shares were converted to 151,508 Class A shares valued at $2,125,580, 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), is a participant in a $225,000,000 revolving line of credit to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. Under the agreement, the Participants are charged an annual commitment fee of 0.08%, which is allocated across the Participants on the basis of each Participants allocation of the entire facility. The Participants are permitted to borrow up to a maximum of one third of their net assets under the agreement. Each Participant is individually, and not jointly, liable for its particular advances, if any, under the line of credit. The line of credit under the agreement will expire on Nov. 10, 2014.
The Fund had no amounts outstanding as of May 31, 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.
30
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 instruments payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out) including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events.
For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the statement of assets and liabilities.
At May 31, 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 |
||||||||||||
Merrill Lynch |
$ | 22,276,482 | $(22,276,482) | $ | $ | |||||||
BNP Paribas |
45,646,518 | (45,646,518 | ) | | | |||||||
|
|
|
|
|
| |||||||
Total |
$ | 67,923,000 | $(67,923,000) | $ | $ | |||||||
|
|
|
|
|
|
(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 the request of the borrower, BNY
31
Notes to financial statements
Delaware Value® Fund
7. Securities Lending (continued)
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 Delaware Management Company (DMC), a series of Delaware Management Business Trust, that participate in BNY Mellons 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 Trusts net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 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
32
price when it is necessary or desirable to do so. While maintaining oversight, the Funds Board has delegated to DMC the day-to-day functions of determining whether individual securities are liquid for purposes of the Funds 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 Funds 15% limit on investments in illiquid securities. As of May 31, 2014, there were no Rule 144A securities held by the fund and no securities have been determined to be illiquid under the Funds Liquidity Procedures.
9. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Funds 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 Funds existing contracts and expects the risk of loss to be remote.
10. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to May 31, 2014, that would require recognition or disclosure in the Funds financial statements.
33
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 | Daniel V. Geatens | David P. OConnor | 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 Value® 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 Funds 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 SECs 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 Funds Schedule of Investments are available without charge on the Funds website at delawareinvestments.com. The Funds Forms N-Q may be reviewed and copied at the SECs 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 Funds website at delawareinvestments.com; and (ii) on the SECs website at sec.gov.
34
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 registrants principal executive officer and principal financial officer have evaluated the registrants 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 registrants 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 registrants second fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 12. Exhibits
(a) |
(1) Code of Ethics | |
Not applicable. | ||
(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT. | ||
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934. | ||
Not applicable. | ||
(b) |
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
Name of Registrant: DELAWARE GROUP® EQUITY FUNDS II
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | August 5, 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: | August 5, 2014 |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 5, 2014 |
EXHIBIT 99.CERT
CERTIFICATION
I, Patrick P. Coyne, certify that:
1. | I have reviewed this report on Form N-CSR of Delaware Group® Equity Funds II; | |||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; | |||
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: | |||
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and | |||
(d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and | |||
5. | The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |||
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and | |||
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 5, 2014
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
CERTIFICATION
I, Richard Salus, certify that:
1. | I have reviewed this report on Form N-CSR of Delaware Group® Equity Funds II; | |||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; | |||
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: | |||
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and | |||
(d) | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and | |||
5. | The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |||
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and | |||
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 5, 2014
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
EXHIBIT 99.906CERT
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the attached report of the registrant on Form N-CSR to be filed with the Securities and Exchange Commission (the Report), each of the undersigned officers of the registrant does hereby certify, to the best of such officers knowledge, that:
1. | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and | |
2. | The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the registrant as of, and for, the periods presented in the Report. |
Date: August 5, 2014
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the registrant and will be retained by the registrant and furnished to the SEC or its staff upon request.
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