UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: | 811-04997 | |
Exact name of registrant as specified in charter: | Delaware Group® Equity Funds V | |
Address of principal executive offices: | 2005 Market Street | |
Philadelphia, PA 19103 | ||
Name and address of agent for service: | David F. Connor, Esq. | |
2005 Market Street | ||
Philadelphia, PA 19103 | ||
Registrant’s telephone number, including area code: | (800) 523-1918 | |
Date of fiscal year end: | November 30 | |
Date of reporting period: | May 31, 2020 |
Item 1. Reports to Stockholders
Semiannual report
Multi-asset mutual fund
Delaware Wealth Builder Fund
May 31, 2020
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Funds shareholder reports will no longer be sent to you by mail, unless you specifically request them from the Fund or from your financial intermediary, such as a broker/dealer, bank, or insurance company. Instead, you will be notified by mail each time a report is posted on the website and provided with a link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you do not need to take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by signing up at delawarefunds.com/edelivery. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive paper copies of all future shareholder reports free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting us at 800 523-1918. If you own these shares through a financial intermediary, you may contact your financial intermediary to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the Delaware Funds® by Macquarie or your financial intermediary.
|
Carefully consider the 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 delawarefunds.com/literature 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 delawarefunds.com/edelivery.
Experience Delaware Funds® by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices in the United States, Europe, Asia, and Australia.
As active managers we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Wealth Builder Fund at delawarefunds.com/literature.
For the six-month period from December 1, 2019 to May 31, 2020 (Unaudited)
The investment objective of the Fund is to seek to provide high current income and an investment that has the potential for capital appreciation.
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Dec. 1, 2019 to May 31, 2020.
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 and assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
For the six-month period from December 1, 2019 to May 31, 2020 (Unaudited)
Delaware Wealth Builder Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/19 |
Ending Account Value 5/31/20 |
Annualized Expense Ratio |
Expenses Paid During Period 12/1/19 to 5/31/20* |
|||||||||||||
Actual Fund return |
||||||||||||||||
Class A |
$1,000.00 | $910.00 | 1.09% | $5.20 | ||||||||||||
Class C |
1,000.00 | 906.00 | 1.84% | 8.77 | ||||||||||||
Class R |
1,000.00 | 908.10 | 1.34% | 6.39 | ||||||||||||
Institutional Class |
1,000.00 | 910.40 | 0.84% | 4.01 | ||||||||||||
Hypothetical 5% return (5% return before expenses) |
| |||||||||||||||
Class A |
$1,000.00 | $1,019.55 | 1.09% | $5.50 | ||||||||||||
Class C |
1,000.00 | 1,015.80 | 1.84% | 9.27 | ||||||||||||
Class R |
1,000.00 | 1,018.30 | 1.34% | 6.76 | ||||||||||||
Institutional Class |
1,000.00 | 1,020.80 | 0.84% | 4.24 |
*Expenses Paid During Period are equal to the Funds annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (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.
In addition to the Funds expenses reflected above, the Fund also indirectly bears its portion of the fees and expenses of the investment companies in which it invests (Underlying Funds), including exchange-traded funds. The table above does not reflect the expenses of the Underlying Funds.
2
Security type / sector allocation and top 10 equity holdings | ||
Delaware Wealth Builder Fund | As of May 31, 2020 (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.
Security type / sector | Percentage of net assets | |||
Common Stock |
61.49 | % | ||
Communication Services |
5.40 | % | ||
Consumer Discretionary |
4.79 | % | ||
Consumer Staples |
5.16 | % | ||
Energy |
1.29 | % | ||
Financials |
7.62 | % | ||
Healthcare |
12.30 | % | ||
Industrials |
5.64 | % | ||
Information Technology |
10.38 | % | ||
Materials |
1.51 | % | ||
Real Estate Operating/Development |
0.40 | % | ||
REIT Diversified |
1.33 | % | ||
REIT Healthcare |
0.37 | % | ||
REIT Hotel |
0.07 | % | ||
REIT Industrial |
0.56 | % | ||
REIT Manufactured Housing |
0.31 | % | ||
REIT Multifamily |
2.10 | % | ||
REIT Self-Storage |
0.19 | % | ||
REIT Shopping Center |
0.12 | % | ||
REIT Specialty |
0.33 | % | ||
Utilities |
1.62 | % | ||
Convertible Preferred Stock |
2.28 | % | ||
Exchange-Traded Funds |
1.24 | % | ||
Limited Partnerships |
1.93 | % | ||
Agency Mortgage-Backed Securities |
0.67 | % | ||
Convertible Bonds |
9.23 | % | ||
Brokerage |
0.44 | % | ||
Capital Goods |
0.25 | % | ||
Communications. |
1.74 | % | ||
Consumer Cyclical |
0.20 | % | ||
Consumer Non-Cyclical |
2.50 | % | ||
Energy |
1.53 | % | ||
Real Estate Investment Trusts |
0.36 | % | ||
Technology |
1.88 | % | ||
Utilities |
0.33 | % | ||
Corporate Bonds |
12.81 | % | ||
Banking |
1.17 | % | ||
Basic Industry |
1.20 | % |
3
Security type / sector allocation and top 10 equity holdings | ||
Delaware Wealth Builder Fund |
Security type / sector | Percentage of net assets | ||||
Capital Goods |
0.46 | % | |||
Communications |
0.79 | % | |||
Consumer Cyclical |
0.79 | % | |||
Consumer Non-Cyclical |
1.09 | % | |||
Energy |
1.36 | % | |||
Financials |
0.33 | % | |||
Healthcare |
1.16 | % | |||
Insurance |
0.22 | % | |||
Media |
1.69 | % | |||
Real Estate Investment Trusts |
0.25 | % | |||
Services |
0.47 | % | |||
Technology & Electronics |
0.74 | % | |||
Transportation |
0.12 | % | |||
Utilities |
0.97 | % | |||
Leveraged Non-Recourse Security | 0.00 | % | |||
Municipal Bonds | 3.57 | % | |||
Non-Agency Commercial Mortgage-Backed Securities | 0.56 | % | |||
Loan Agreement | 0.11 | % | |||
Sovereign Bonds | 1.50 | % | |||
Supranational Banks | 0.12 | % | |||
US Treasury Obligations | 0.69 | % | |||
Preferred Stock | 0.51 | % | |||
Short-Term Investments | 2.78 | % | |||
Total Value of Securities | 99.49 | % | |||
Receivables and Other Assets Net of Liabilities | 0.51 | % | |||
Total Net Assets | 100.00 | % |
4
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 | ||||
Microsoft |
1.72 | % | |||
Amazon.com |
1.47 | % | |||
Dollar Tree |
1.46 | % | |||
Honeywell International |
1.45 | % | |||
Lowes |
1.45 | % | |||
Cisco Systems |
1.42 | % | |||
Bank of New York Mellon |
1.42 | % | |||
Archer-Daniels-Midland |
1.41 | % | |||
AbbVie |
1.39 | % | |||
Raytheon Technologies |
1.37 | % |
5
Schedule of investments | ||
Delaware Wealth Builder Fund | May 31, 2020 (Unaudited) |
Number of shares | Value (US $) | |||||||
Common Stock 61.49% |
||||||||
Communication Services 5.40% |
||||||||
AT&T |
166,500 | $ | 5,138,190 | |||||
Century Communications = |
1,625,000 | 0 | ||||||
Comcast Class A |
138,803 | 5,496,599 | ||||||
KDDI |
18,200 | 529,234 | ||||||
Orange |
33,880 | 407,864 | ||||||
Verizon Communications |
87,800 | 5,037,964 | ||||||
Walt Disney |
45,466 | 5,333,162 | ||||||
|
|
|||||||
21,943,013 | ||||||||
|
|
|||||||
Consumer Discretionary 4.79% |
||||||||
adidas AG |
1,470 | 387,057 | ||||||
Amazon.com |
2,438 | 5,954,498 | ||||||
Dollar Tree |
60,500 | 5,921,135 | ||||||
Hennes & Mauritz Class B |
9,000 | 135,775 | ||||||
Lowes |
45,000 | 5,865,750 | ||||||
Next |
2,870 | 172,402 | ||||||
Publicis Groupe |
14,225 | 402,973 | ||||||
Sodexo |
5,010 | 336,684 | ||||||
Swatch Group |
1,420 | 283,321 | ||||||
|
|
|||||||
19,459,595 | ||||||||
|
|
|||||||
Consumer Staples 5.16% |
||||||||
Archer-Daniels-Midland |
145,900 | 5,735,329 | ||||||
Asahi Group Holdings |
8,200 | 308,550 | ||||||
Conagra Brands |
158,200 | 5,503,778 | ||||||
Danone |
10,460 | 714,781 | ||||||
Diageo |
13,420 | 462,489 | ||||||
Kao |
2,800 | 224,504 | ||||||
Kerry Group Class A |
1,520 | 187,794 | ||||||
Kirin Holdings |
7,700 | 157,613 | ||||||
Koninklijke Ahold Delhaize |
31,650 | 801,386 | ||||||
Lawson |
5,200 | 287,375 | ||||||
Mondelez International Class A |
99,900 | 5,206,788 | ||||||
Nestle |
6,970 | 752,656 | ||||||
Seven & i Holdings |
17,500 | 598,289 | ||||||
|
|
|||||||
20,941,332 | ||||||||
|
|
|||||||
Energy 1.29% |
||||||||
ConocoPhillips |
124,261 | 5,241,329 | ||||||
|
|
|||||||
5,241,329 | ||||||||
|
|
|||||||
Financials 7.62% |
||||||||
Allstate |
50,300 | 4,919,843 | ||||||
American International Group |
183,200 | 5,506,992 | ||||||
Banco Espirito Santo = |
105,000 | 0 |
6
Number of shares | Value (US $) | |||||||
Common Stock (continued) |
||||||||
Financials (continued) |
||||||||
Bank of New York Mellon |
154,800 | $ | 5,753,916 | |||||
Hercules Capital |
46,329 | 516,105 | ||||||
JPMorgan Chase & Co. |
37,505 | 3,649,611 | ||||||
Marsh & McLennan |
49,000 | 5,190,080 | ||||||
Truist Financial |
147,400 | 5,421,372 | ||||||
|
|
|||||||
30,957,919 | ||||||||
|
|
|||||||
Healthcare 12.30% |
||||||||
Abbott Laboratories |
52,600 | 4,992,792 | ||||||
AbbVie |
61,068 | 5,659,172 | ||||||
Brookdale Senior Living |
1,387,924 | 5,079,802 | ||||||
Cardinal Health |
100,500 | 5,496,345 | ||||||
Cigna |
27,500 | 5,426,300 | ||||||
CVS Health |
83,400 | 5,468,538 | ||||||
Fresenius Medical Care AG & Co. |
8,930 | 749,404 | ||||||
Johnson & Johnson |
33,700 | 5,012,875 | ||||||
Merck & Co. |
64,300 | 5,190,296 | ||||||
Novo Nordisk Class B |
13,905 | 903,339 | ||||||
Pfizer |
133,838 | 5,111,273 | ||||||
Roche Holding |
2,520 | 871,703 | ||||||
|
|
|||||||
49,961,839 | ||||||||
|
|
|||||||
Industrials 5.64% |
||||||||
Caterpillar |
45,493 | 5,465,074 | ||||||
G4S |
220,920 | 245,553 | ||||||
Honeywell International |
40,383 | 5,889,860 | ||||||
Makita |
10,000 | 338,449 | ||||||
Northrop Grumman |
14,300 | 4,793,360 | ||||||
Raytheon Technologies |
86,379 | 5,573,173 | ||||||
Secom |
2,100 | 181,755 | ||||||
Securitas Class B |
30,365 | 402,179 | ||||||
|
|
|||||||
22,889,403 | ||||||||
|
|
|||||||
Information Technology 10.38% |
||||||||
Broadcom |
18,500 | 5,388,495 | ||||||
Cisco Systems |
120,400 | 5,757,528 | ||||||
Cognizant Technology Solutions Class A |
89,732 | 4,755,796 | ||||||
Fiserv |
41,155 | 4,394,119 | ||||||
Intel |
88,400 | 5,563,012 | ||||||
Mastercard Class A |
9,237 | 2,779,321 | ||||||
Microsoft |
38,168 | 6,994,286 | ||||||
Oracle |
97,100 | 5,221,067 | ||||||
Texas Instruments |
11,137 | 1,322,407 | ||||||
|
|
|||||||
42,176,031 | ||||||||
|
|
7
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Common Stock (continued) |
||||||||
Materials 1.51% |
||||||||
Air Liquide |
5,240 | $ | 710,214 | |||||
DuPont de Nemours |
106,700 | 5,412,891 | ||||||
|
|
|||||||
6,123,105 | ||||||||
|
|
|||||||
Real Estate Operating/Development 0.40% |
||||||||
Grainger |
192,741 | 683,161 | ||||||
Postal Realty Trust Class A |
55,000 | 931,150 | ||||||
|
|
|||||||
1,614,311 | ||||||||
|
|
|||||||
REIT Diversified 1.33% |
||||||||
Alpine Income Property Trust |
37,286 | 461,228 | ||||||
American Tower |
2,139 | 552,226 | ||||||
Cousins Properties |
13,407 | 417,226 | ||||||
Gaming and Leisure Properties |
15,130 | 522,590 | ||||||
Lexington Realty Trust |
97,884 | 951,432 | ||||||
QTS Realty Trust Class A |
13,516 | 927,198 | ||||||
SBA Communications |
2,564 | 805,429 | ||||||
VICI Properties |
39,833 | 781,523 | ||||||
|
|
|||||||
5,418,852 | ||||||||
|
|
|||||||
REIT Healthcare 0.37% |
||||||||
Assura |
709,038 | 691,773 | ||||||
Welltower |
16,231 | 822,425 | ||||||
|
|
|||||||
1,514,198 | ||||||||
|
|
|||||||
REIT Hotel 0.07% |
||||||||
MGM Growth Properties Class A |
10,348 | 286,950 | ||||||
|
|
|||||||
286,950 | ||||||||
|
|
|||||||
REIT Industrial 0.56% |
||||||||
Americold Realty Trust |
23,727 | 847,291 | ||||||
Prologis |
15,646 | 1,431,609 | ||||||
|
|
|||||||
2,278,900 | ||||||||
|
|
|||||||
REIT Manufactured Housing 0.31% |
||||||||
Sun Communities |
9,227 | 1,265,852 | ||||||
|
|
|||||||
1,265,852 | ||||||||
|
|
|||||||
REIT Multifamily 2.10% |
||||||||
Apartment Investment and Management Class A |
16,783 | 618,789 | ||||||
Bluerock Residential Growth REIT |
28,226 | 181,493 | ||||||
Camden Property Trust |
12,788 | 1,170,997 | ||||||
Equity Residential |
78,310 | 4,742,454 | ||||||
NexPoint Residential Trust |
20,925 | 669,181 | ||||||
UDR |
31,504 | 1,165,018 | ||||||
|
|
|||||||
8,547,932 | ||||||||
|
|
8
Number of shares | Value (US $) | |||||||
Common Stock (continued) |
||||||||
REIT Self-Storage 0.19% |
||||||||
Extra Space Storage |
8,057 | $ | 779,515 | |||||
|
|
| ||||||
779,515 | ||||||||
|
|
| ||||||
REIT Shopping Center 0.12% |
||||||||
Brixmor Property Group |
9,099 | 101,545 | ||||||
Kimco Realty |
22,585 | 250,919 | ||||||
SITE Centers |
20,737 | 117,579 | ||||||
|
|
| ||||||
470,043 | ||||||||
|
|
| ||||||
REIT Specialty 0.33% |
||||||||
Invitation Homes |
50,394 | 1,325,362 | ||||||
|
|
| ||||||
1,325,362 | ||||||||
|
|
| ||||||
Utilities 1.62% |
||||||||
Edison International |
84,400 | 4,904,484 | ||||||
NextEra Energy |
6,570 | 1,679,029 | ||||||
|
|
| ||||||
6,583,513 | ||||||||
|
|
| ||||||
Total Common Stock (cost $255,101,881) |
249,778,994 | |||||||
|
|
| ||||||
Convertible Preferred Stock 2.28% |
||||||||
2020 Mandatory Exchangeable Trust 144A 6.50% exercise price $47.09, maturity date 5/16/23 # |
925 | 1,001,590 | ||||||
AMG Capital Trust II 5.15% exercise price $195.47, maturity date 10/15/37 |
28,850 | 1,172,559 | ||||||
Bank of America 7.25% exercise price $50.00 Y |
1,063 | 1,450,464 | ||||||
El Paso Energy Capital Trust I 4.75% exercise price $34.49, maturity date 3/31/28 |
37,300 | 1,737,061 | ||||||
Elanco Animal Health 5.00% exercise price $38.40, maturity date 2/1/23 |
25,268 | 960,942 | ||||||
Lyondellbasell Advanced Polymers 6.00% exercise price $52.33 Y |
2,140 | 2,209,550 | ||||||
QTS Realty Trust 6.50% exercise price $46.86 Y |
4,904 | 747,762 | ||||||
|
|
| ||||||
Total Convertible Preferred Stock (cost $9,005,299) |
9,279,928 | |||||||
|
|
| ||||||
Exchange-Traded Funds 1.24% |
||||||||
iShares MSCI EAFE ETF |
160 | 9,542 | ||||||
SPDR Gold Shares |
19,710 | 3,210,956 | ||||||
VanEck Vectors High-Yield Municipal Index ETF |
29,818 | 1,722,884 | ||||||
Vanguard FTSE Developed Markets ETF |
3,040 | 114,517 | ||||||
|
|
| ||||||
Total Exchange-Traded Funds (cost $4,823,176) |
5,057,899 | |||||||
|
|
| ||||||
Limited Partnerships 1.93% |
||||||||
Merion Champions Walk =p |
2,790,000 | 2,351,412 |
9
Schedule of investments
Delaware Wealth Builder Fund
Number of shares | Value (US $) | |||||||
Limited Partnerships (continued) |
||||||||
Merion Countryside 144A #=p |
2,342,813 | $ | 1,889,244 | |||||
Merion The Ledges =p |
3,970,235 | 3,589,887 | ||||||
|
|
| ||||||
Total Limited Partnerships (cost $5,899,625) |
7,830,543 | |||||||
|
|
| ||||||
Principal amount° | ||||||||
Agency Mortgage-Backed Securities 0.67% |
||||||||
Fannie Mae S.F. 30 yr |
||||||||
3.00% 11/1/48 |
25,725 | 27,184 | ||||||
3.00% 12/1/49 |
9,768 | 10,379 | ||||||
3.50% 2/1/48 |
121,384 | 131,934 | ||||||
3.50% 11/1/48 |
53,874 | 57,195 | ||||||
3.50% 12/1/49 |
339,647 | 367,251 | ||||||
4.00% 4/1/47 |
18,332 | 20,331 | ||||||
4.00% 4/1/48 |
147,112 | 157,186 | ||||||
4.00% 9/1/48 |
14,604 | 15,809 | ||||||
4.00% 4/1/49 |
147,206 | 156,611 | ||||||
4.50% 2/1/41 |
17,685 | 19,675 | ||||||
4.50% 4/1/48 |
730,955 | 823,075 | ||||||
4.50% 1/1/49 |
285,415 | 319,813 | ||||||
4.50% 11/1/49 |
45,897 | 49,516 | ||||||
4.50% 1/1/50 |
32,920 | 36,075 | ||||||
5.00% 7/1/49 |
278,554 | 306,778 | ||||||
Freddie Mac S.F. 30 yr |
||||||||
3.00% 1/1/50 |
24,158 | 25,625 | ||||||
4.00% 7/1/47 |
8,957 | 9,585 | ||||||
4.00% 10/1/47 |
83,901 | 89,746 | ||||||
4.50% 4/1/49 |
28,090 | 30,910 | ||||||
4.50% 8/1/49 |
57,394 | 63,846 | ||||||
|
|
| ||||||
Total Agency Mortgage-Backed Securities (cost $2,632,058) |
2,718,524 | |||||||
|
|
| ||||||
Convertible Bonds 9.23% |
||||||||
Brokerage 0.44% |
||||||||
GAIN Capital Holdings |
||||||||
5.00% exercise price $8.20, maturity date 8/15/22 |
1,764,000 | 1,784,266 | ||||||
|
|
| ||||||
1,784,266 | ||||||||
|
|
| ||||||
Capital Goods 0.25% |
||||||||
Chart Industries |
||||||||
144A 1.00% exercise price $58.73, maturity date 11/15/24 # |
1,073,000 | 1,001,988 | ||||||
|
|
| ||||||
1,001,988 | ||||||||
|
|
| ||||||
Communications 1.74% |
||||||||
DISH Network |
||||||||
2.375% exercise price $82.22, maturity date 3/15/24 |
2,135,000 | 1,845,441 |
10
Principal amount° | Value (US $) | |||||||
Convertible Bonds (continued) |
||||||||
Communications (continued) |
||||||||
GCI Liberty |
||||||||
144A 1.75% exercise price $370.52, maturity date 9/30/46 # |
1,626,000 | $ | 2,406,304 | |||||
InterDigital |
||||||||
144A 2.00% exercise price $81.29, maturity date 6/1/24 # |
1,391,000 | 1,382,850 | ||||||
Liberty Media |
||||||||
2.25% exercise price $33.85, maturity date 9/30/46 |
2,947,000 | 1,424,874 | ||||||
|
|
| ||||||
7,059,469 | ||||||||
|
|
| ||||||
Consumer Cyclical 0.20% |
||||||||
Meritor |
||||||||
3.25% exercise price $39.92, maturity date 10/15/37 |
803,000 | 793,763 | ||||||
|
|
| ||||||
793,763 | ||||||||
|
|
| ||||||
Consumer Non-Cyclical 2.50% |
||||||||
BioMarin Pharmaceutical |
||||||||
0.599% exercise price $124.67, maturity date 8/1/24 |
1,143,000 | 1,286,284 | ||||||
Chefs Warehouse |
||||||||
144A 1.875% exercise price $44.20, maturity date 12/1/24 # |
1,077,000 | 829,595 | ||||||
Coherus Biosciences |
||||||||
144A 1.50% exercise price $19.26, maturity date 4/15/26 # |
109,000 | 125,660 | ||||||
Collegium Pharmaceutical |
||||||||
2.625% exercise price $29.19, maturity date 2/15/26 |
648,000 | 657,438 | ||||||
FTI Consulting |
||||||||
2.00% exercise price $101.38, maturity date 8/15/23 |
397,000 | 530,131 | ||||||
Integra LifeSciences Holdings |
||||||||
144A 0.50% exercise price $73.67, maturity date 8/15/25 # |
1,097,000 | 1,044,454 | ||||||
Jazz Investments I |
||||||||
1.875% exercise price $199.77, maturity date 8/15/21 |
1,105,000 | 1,084,845 | ||||||
Ligand Pharmaceuticals |
||||||||
0.75% exercise price $248.48, maturity date 5/15/23 |
864,000 | 753,235 | ||||||
Paratek Pharmaceuticals |
||||||||
4.75% exercise price $15.90, maturity date 5/1/24 |
1,604,000 | 1,256,023 | ||||||
Retrophin |
||||||||
2.50% exercise price $38.80, maturity date 9/15/25 |
1,390,000 | 1,072,685 | ||||||
Team |
||||||||
5.00% exercise price $21.70, maturity date 8/1/23 |
1,615,000 | 985,662 |
11
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Convertible Bonds (continued) |
||||||||
Consumer Non-Cyclical (continued) |
||||||||
Tricida |
||||||||
144A 3.50% exercise price $33.23, maturity date 5/15/27 # |
541,000 | $ | 546,015 | |||||
|
|
| ||||||
10,172,027 | ||||||||
|
|
| ||||||
Energy 1.53% |
||||||||
Cheniere Energy |
||||||||
4.25% exercise price $138.38, maturity date 3/15/45 |
2,892,000 | 1,790,955 | ||||||
Helix Energy Solutions Group |
||||||||
4.25% exercise price $13.89, maturity date 5/1/22 |
2,574,000 | 2,101,437 | ||||||
PDC Energy |
||||||||
1.125% exercise price $85.39, maturity date 9/15/21 |
2,527,000 | 2,334,413 | ||||||
|
|
| ||||||
6,226,805 | ||||||||
|
|
| ||||||
Real Estate Investment Trusts 0.36% |
||||||||
Blackstone Mortgage Trust |
||||||||
4.75% exercise price $36.23, maturity date 3/15/23 |
1,599,000 | 1,462,086 | ||||||
|
|
| ||||||
1,462,086 | ||||||||
|
|
| ||||||
Technology 1.88% |
||||||||
Boingo Wireless |
||||||||
1.00% exercise price $42.32, maturity date 10/1/23 |
2,698,000 | 2,380,920 | ||||||
Knowles |
||||||||
3.25% exercise price $18.43, maturity date 11/1/21 |
973,000 | 1,041,941 | ||||||
ON Semiconductor |
||||||||
1.625% exercise price $20.72, maturity date 10/15/23 |
544,000 | 604,453 | ||||||
Pluralsight |
||||||||
0.375% exercise price $38.76, maturity date 3/1/24 |
1,796,000 | 1,606,342 | ||||||
Quotient Technology |
||||||||
1.75% exercise price $17.36, maturity date 12/1/22 |
1,564,000 | 1,405,723 | ||||||
Synaptics |
||||||||
0.50% exercise price $73.02, maturity date 6/15/22 |
544,000 | 593,853 | ||||||
|
|
| ||||||
7,633,232 | ||||||||
|
|
| ||||||
Utilities 0.33% |
||||||||
NRG Energy |
||||||||
2.75% exercise price $47.74, maturity date 6/1/48 |
1,303,000 | 1,341,880 | ||||||
|
|
| ||||||
1,341,880 | ||||||||
|
|
| ||||||
Total Convertible Bonds (cost $39,733,839) |
37,475,516 | |||||||
|
|
| ||||||
Corporate Bonds 12.81% |
||||||||
Banking 1.17% |
||||||||
Ally Financial 5.75% 11/20/25 |
798,000 | 832,414 | ||||||
Banco de Credito del Peru 144A 2.70% 1/11/25 # |
204,000 | 204,115 | ||||||
Banco del Estado de Chile 144A 2.704% 1/9/25 # |
205,000 | 207,434 |
12
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Banking (continued) |
||||||||
Bank of America |
||||||||
2.456% 10/22/25 µ |
15,000 | $ | 15,625 | |||||
2.884% 10/22/30 µ |
20,000 | 21,043 | ||||||
3.194% 7/23/30 µ |
55,000 | 59,183 | ||||||
3.458% 3/15/25 µ |
45,000 | 48,436 | ||||||
Bank of Georgia 144A 6.00% 7/26/23 # |
200,000 | 197,040 | ||||||
BBVA Bancomer |
||||||||
144A 5.125% 1/18/33 #µ |
384,000 | 352,764 | ||||||
144A 6.75% 9/30/22 # |
274,000 | 291,187 | ||||||
Credit Suisse Group 144A 6.25% #µY |
360,000 | 378,144 | ||||||
JPMorgan Chase & Co. |
||||||||
2.739% 10/15/30 µ |
20,000 | 20,796 | ||||||
4.023% 12/5/24 µ |
80,000 | 87,546 | ||||||
5.00%µY |
85,000 | 79,866 | ||||||
Morgan Stanley |
||||||||
1.668% (LIBOR03M + 1.22%) 5/8/24 ● |
35,000 | 34,845 | ||||||
5.00% 11/24/25 |
95,000 | 109,457 | ||||||
PNC Financial Services Group 2.60% 7/23/26 |
180,000 | 194,647 | ||||||
Popular 6.125% 9/14/23 |
560,000 | 566,241 | ||||||
Royal Bank of Scotland Group 8.625% µY |
520,000 | 541,102 | ||||||
State Street |
||||||||
3.10% 5/15/23 |
10,000 | 10,657 | ||||||
3.30% 12/16/24 |
130,000 | 143,807 | ||||||
Truist Bank 2.636% 9/17/29 µ |
185,000 | 183,820 | ||||||
US Bancorp |
||||||||
3.00% 7/30/29 |
25,000 | 27,107 | ||||||
3.10% 4/27/26 |
25,000 | 27,233 | ||||||
3.375% 2/5/24 |
60,000 | 65,583 | ||||||
USB Capital IX 3.50% (LIBOR03M + 1.02%)Y● |
85,000 | 69,423 | ||||||
|
|
| ||||||
4,769,515 | ||||||||
|
|
| ||||||
Basic Industry 1.20% |
||||||||
BMC East 144A 5.50% 10/1/24 # |
163,000 | 164,002 | ||||||
Boise Cascade 144A 5.625% 9/1/24 # |
295,000 | 301,238 | ||||||
FMG Resources August 2006 144A 5.125% 5/15/24 # |
246,000 | 254,636 | ||||||
Freeport-McMoRan |
||||||||
4.55% 11/14/24 |
200,000 | 204,021 | ||||||
5.45% 3/15/43 |
320,000 | 317,293 | ||||||
Hudbay Minerals 144A 7.625% 1/15/25 # |
135,000 | 123,079 | ||||||
Hutama Karya Persero 144A 3.75% 5/11/30 # |
200,000 | 208,628 | ||||||
Koppers 144A 6.00% 2/15/25 # |
434,000 | 400,630 | ||||||
Methanex 5.25% 12/15/29 |
185,000 | 161,824 | ||||||
Minera Mexico 144A 4.50% 1/26/50 # |
200,000 | 192,799 |
13
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Basic Industry (continued) |
||||||||
Newmont 2.80% 10/1/29 |
190,000 | $ | 198,446 | |||||
OCP 144A 4.50% 10/22/25 # |
200,000 | 200,456 | ||||||
Olin |
||||||||
5.00% 2/1/30 |
135,000 | 116,413 | ||||||
5.125% 9/15/27 |
437,000 | 390,199 | ||||||
PolyOne 144A 5.75% 5/15/25 # |
118,000 | 123,924 | ||||||
RPM International 4.55% 3/1/29 |
170,000 | 184,317 | ||||||
Standard Industries |
||||||||
144A 4.75% 1/15/28 # |
445,000 | 449,207 | ||||||
144A 5.00% 2/15/27 # |
160,000 | 165,196 | ||||||
Steel Dynamics 5.00% 12/15/26 |
505,000 | 525,104 | ||||||
Univar Solutions USA 144A 5.125% 12/1/27 # |
180,000 | 182,667 | ||||||
US Concrete 6.375% 6/1/24 |
10,000 | 10,051 | ||||||
|
|
|||||||
4,874,130 | ||||||||
|
|
|||||||
Capital Goods 0.46% |
||||||||
Bombardier 144A 6.00% 10/15/22 # |
240,000 | 155,550 | ||||||
Crown Americas 4.75% 2/1/26 |
463,000 | 482,765 | ||||||
Mauser Packaging Solutions Holding 144A 5.50% 4/15/24 # |
551,000 | 548,584 | ||||||
Roper Technologies 2.35% 9/15/24 |
185,000 | 192,339 | ||||||
TransDigm 144A 6.25% 3/15/26 # |
492,000 | 504,221 | ||||||
|
|
|||||||
1,883,459 | ||||||||
|
|
|||||||
Communications 0.79% |
||||||||
Altice France 144A 7.375% 5/1/26 # |
565,000 | 597,383 | ||||||
AT&T 4.35% 3/1/29 |
170,000 | 192,813 | ||||||
Level 3 Financing 144A 3.875% 11/15/29 # |
210,000 | 215,411 | ||||||
Ooredoo International Finance 144A 5.00% 10/19/25 # |
200,000 | 225,750 | ||||||
Sprint |
||||||||
7.125% 6/15/24 |
612,000 | 695,480 | ||||||
7.875% 9/15/23 |
22,000 | 25,027 | ||||||
T-Mobile USA 6.50% 1/15/26 |
460,000 | 486,503 | ||||||
Verizon Communications |
||||||||
4.50% 8/10/33 |
95,000 | 117,991 | ||||||
4.522% 9/15/48 |
35,000 | 45,715 | ||||||
Vodafone Group |
||||||||
4.25% 9/17/50 |
110,000 | 126,863 | ||||||
4.875% 6/19/49 |
40,000 | 50,247 | ||||||
Zayo Group Holdings 144A 4.00% 3/1/27 # |
415,000 | 409,748 | ||||||
|
|
|||||||
3,188,931 | ||||||||
|
|
|||||||
Consumer Cyclical 0.79% |
||||||||
Allison Transmission 144A 5.875% 6/1/29 # |
460,000 | 465,936 | ||||||
Boyd Gaming 6.375% 4/1/26 |
452,000 | 450,651 |
14
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Consumer Cyclical (continued) |
||||||||
Future Retail 144A 5.60% 1/22/25 # |
205,000 | $ | 78,091 | |||||
General Motors Financial |
||||||||
4.35% 4/9/25 |
75,000 | 76,294 | ||||||
5.25% 3/1/26 |
95,000 | 99,504 | ||||||
HD Supply 144A 5.375% 10/15/26 # |
290,000 | 300,992 | ||||||
Hilton Worldwide Finance 4.875% 4/1/27 |
545,000 | 542,174 | ||||||
KFC Holding 144A 5.25% 6/1/26 # |
470,000 | 490,283 | ||||||
Lennar 4.75% 5/30/25 |
115,000 | 123,062 | ||||||
Lowes |
||||||||
4.05% 5/3/47 |
5,000 | 5,749 | ||||||
4.55% 4/5/49 |
136,000 | 169,846 | ||||||
MGM Resorts International 5.75% 6/15/25 |
48,000 | 48,030 | ||||||
PulteGroup 5.00% 1/15/27 |
15,000 | 15,944 | ||||||
Scientific Games International 144A 8.25% 3/15/26 # |
164,000 | 150,906 | ||||||
William Carter 144A 5.625% 3/15/27 # |
200,000 | 204,879 | ||||||
|
|
|||||||
3,222,341 | ||||||||
|
|
|||||||
Consumer Non-Cyclical 1.09% |
||||||||
Albertsons 144A 4.875% 2/15/30 # |
64,000 | 66,520 | ||||||
Alcon Finance 144A 3.00% 9/23/29 # |
200,000 | 209,480 | ||||||
Anheuser-Busch InBev Worldwide |
||||||||
3.65% 2/1/26 |
125,000 | 138,706 | ||||||
4.15% 1/23/25 |
50,000 | 56,262 | ||||||
Cott Holdings 144A 5.50% 4/1/25 # |
272,000 | 275,031 | ||||||
CVS Health 3.25% 8/15/29 |
185,000 | 200,808 | ||||||
Gilead Sciences 4.15% 3/1/47 |
165,000 | 208,520 | ||||||
JBS USA LUX |
||||||||
144A 5.75% 6/15/25 # |
318,000 | 326,745 | ||||||
144A 6.50% 4/15/29 # |
305,000 | 332,392 | ||||||
Pilgrims Pride 144A 5.75% 3/15/25 # |
535,000 | 548,431 | ||||||
Post Holdings |
||||||||
144A 5.00% 8/15/26 # |
311,000 | 319,495 | ||||||
144A 5.625% 1/15/28 # |
160,000 | 167,970 | ||||||
144A 5.75% 3/1/27 # |
295,000 | 308,394 | ||||||
United Rentals North America |
||||||||
5.50% 5/15/27 |
713,000 | 758,857 | ||||||
5.875% 9/15/26 |
5,000 | 5,266 | ||||||
US Foods 144A 6.25% 4/15/25 # |
230,000 | 239,487 | ||||||
Verscend Escrow 144A 9.75% 8/15/26 # |
225,000 | 242,585 | ||||||
|
|
|||||||
4,404,949 | ||||||||
|
|
|||||||
Energy 1.36% |
||||||||
Cheniere Corpus Christi Holdings 7.00% 6/30/24 |
135,000 | 150,363 | ||||||
Cheniere Energy Partners 5.25% 10/1/25 |
305,000 | 308,999 |
15
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Energy (continued) |
||||||||
Crestwood Midstream Partners 6.25% 4/1/23 |
245,000 | $ | 234,001 | |||||
Energy Transfer Operating |
||||||||
5.25% 4/15/29 |
95,000 | 101,904 | ||||||
6.25% 4/15/49 |
60,000 | 65,305 | ||||||
Gazprom PJSC via Gaz Finance 144A 3.25% 2/25/30 # |
205,000 | 204,447 | ||||||
Hilcorp Energy I 144A 5.00% 12/1/24 # |
240,000 | 212,075 | ||||||
Israel Electric 144A 4.25% 8/14/28 # |
300,000 | 327,558 | ||||||
KazTransGas 144A 4.375% 9/26/27 # |
381,000 | 384,669 | ||||||
Marathon Oil 4.40% 7/15/27 |
130,000 | 119,106 | ||||||
MPLX |
||||||||
4.00% 3/15/28 |
30,000 | 30,924 | ||||||
5.50% 2/15/49 |
55,000 | 62,455 | ||||||
Murphy Oil 5.875% 12/1/27 |
292,000 | 272,017 | ||||||
Murphy Oil USA 5.625% 5/1/27 |
609,000 | 637,051 | ||||||
Newfield Exploration 5.375% 1/1/26 |
423,000 | 375,790 | ||||||
Noble Energy |
||||||||
3.25% 10/15/29 |
85,000 | 73,847 | ||||||
3.90% 11/15/24 |
20,000 | 19,793 | ||||||
4.20% 10/15/49 |
15,000 | 12,252 | ||||||
4.95% 8/15/47 |
50,000 | 42,840 | ||||||
5.05% 11/15/44 |
5,000 | 4,348 | ||||||
NuStar Logistics 5.625% 4/28/27 |
228,000 | 216,558 | ||||||
Petrobras Global Finance 6.75% 6/3/50 |
150,000 | 146,633 | ||||||
Precision Drilling 144A 7.125% 1/15/26 # |
400,000 | 201,424 | ||||||
Sabine Pass Liquefaction |
||||||||
5.625% 3/1/25 |
55,000 | 61,405 | ||||||
5.75% 5/15/24 |
110,000 | 121,812 | ||||||
Sinopec Group Overseas Development 2018 144A 2.50% 8/8/24 # |
610,000 | 628,135 | ||||||
Southwestern Energy 7.75% 10/1/27 |
290,000 | 271,340 | ||||||
Targa Resources Partners 5.375% 2/1/27 |
237,000 | 236,067 | ||||||
|
|
|||||||
5,523,118 | ||||||||
|
|
|||||||
Financials 0.33% |
||||||||
AerCap Global Aviation Trust 144A 6.50% 6/15/45 #µ |
240,000 | 179,220 | ||||||
AerCap Ireland Capital 4.45% 4/3/26 |
150,000 | 130,291 | ||||||
DAE Funding 144A 5.75% 11/15/23 # |
284,000 | 251,665 | ||||||
E*TRADE Financial 5.875% µy |
530,000 | 545,526 | ||||||
International Lease Finance 8.625% 1/15/22 |
50,000 | 51,269 | ||||||
Jefferies Group |
||||||||
4.15% 1/23/30 |
170,000 | 171,042 |
16
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Financials (continued) |
||||||||
Jefferies Group |
||||||||
6.45% 6/8/27 |
10,000 | $ | 11,112 | |||||
6.50% 1/20/43 |
5,000 | 5,398 | ||||||
|
|
|||||||
1,345,523 | ||||||||
|
|
|||||||
Healthcare 1.16% |
||||||||
Bausch Health 144A 5.50% 11/1/25 # |
630,000 | 652,444 | ||||||
Centene |
||||||||
3.375% 2/15/30 |
295,000 | 297,527 | ||||||
144A 5.375% 8/15/26 # |
470,000 | 498,717 | ||||||
Charles River Laboratories International 144A |
||||||||
5.50% 4/1/26 # |
425,000 | 445,015 | ||||||
Community Health Systems 144A 6.625% 2/15/25 # |
170,000 | 164,581 | ||||||
Encompass Health |
||||||||
5.75% 11/1/24 |
105,000 | 105,900 | ||||||
5.75% 9/15/25 |
244,000 | 250,989 | ||||||
HCA |
||||||||
5.375% 2/1/25 |
559,000 | 615,065 | ||||||
5.875% 2/15/26 |
219,000 | 245,662 | ||||||
7.58% 9/15/25 |
219,000 | 248,565 | ||||||
Hill-Rom Holdings 144A 5.00% 2/15/25 # |
242,000 | 249,537 | ||||||
Hologic 144A 4.625% 2/1/28 # |
300,000 | 311,568 | ||||||
Tenet Healthcare |
||||||||
5.125% 5/1/25 |
345,000 | 351,184 | ||||||
8.125% 4/1/22 |
241,000 | 252,381 | ||||||
Universal Health Services 144A 5.00% 6/1/26 # |
5,000 | 5,143 | ||||||
|
|
|||||||
4,694,278 | ||||||||
|
|
|||||||
Insurance 0.22% |
||||||||
HUB International 144A 7.00% 5/1/26 # |
415,000 | 427,543 | ||||||
USI 144A 6.875% 5/1/25 # |
468,000 | 480,966 | ||||||
|
|
|||||||
908,509 | ||||||||
|
|
|||||||
Media 1.69% |
||||||||
Altice Financing 144A 5.00% 1/15/28 # |
200,000 | 202,313 | ||||||
AMC Networks 4.75% 8/1/25 |
541,000 | 546,467 | ||||||
CCO Holdings |
||||||||
144A 4.50% 8/15/30 # |
105,000 | 109,184 | ||||||
144A 5.375% 6/1/29 # |
580,000 | 626,293 | ||||||
144A 5.875% 5/1/27 # |
519,000 | 545,160 | ||||||
Charter Communications Operating |
||||||||
4.80% 3/1/50 |
70,000 | 78,203 | ||||||
5.05% 3/30/29 |
100,000 | 117,332 | ||||||
CSC Holdings |
||||||||
5.25% 6/1/24 |
5,000 | 5,287 |
17
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Media (continued) |
||||||||
CSC Holdings |
||||||||
5.875% 9/15/22 |
22,000 | $ | 23,244 | |||||
6.75% 11/15/21 |
370,000 | 390,848 | ||||||
144A 7.50% 4/1/28 # |
400,000 | 444,162 | ||||||
144A 7.75% 7/15/25 # |
465,000 | 486,209 | ||||||
Discovery Communications 4.125% 5/15/29 |
175,000 | 187,410 | ||||||
Gray Television 144A 5.875% 7/15/26 # |
473,000 | 489,467 | ||||||
Lamar Media 5.75% 2/1/26 |
473,000 | 493,606 | ||||||
Netflix 5.875% 11/15/28 |
625,000 | 712,616 | ||||||
Sinclair Television Group 144A 5.125% 2/15/27 # |
362,000 | 338,086 | ||||||
Sirius XM Radio |
||||||||
144A 5.00% 8/1/27 # |
470,000 | 492,238 | ||||||
144A 5.375% 4/15/25 # |
286,000 | 294,218 | ||||||
Time Warner Cable 7.30% 7/1/38 |
60,000 | 80,183 | ||||||
Time Warner Entertainment 8.375% 3/15/23 |
25,000 | 29,439 | ||||||
ViacomCBS 4.375% 3/15/43 |
180,000 | 172,116 | ||||||
|
|
|||||||
6,864,081 | ||||||||
|
|
|||||||
Real Estate Investment Trusts 0.25% |
||||||||
Crown Castle International 5.25% 1/15/23 |
125,000 | 137,883 | ||||||
MGM Growth Properties Operating Partnership 5.75% 2/1/27 |
160,000 | 168,074 | ||||||
SBA Communications 4.875% 9/1/24 |
670,000 | 692,813 | ||||||
|
|
|||||||
998,770 | ||||||||
|
|
|||||||
Services 0.47% |
||||||||
Aramark Services 144A 5.00% 2/1/28 # |
485,000 | 478,848 | ||||||
Ashtead Capital 144A 5.25% 8/1/26 # |
570,000 | 597,075 | ||||||
Covanta Holding 5.875% 7/1/25 |
233,000 | 230,986 | ||||||
Prime Security Services Borrower 144A 5.75% 4/15/26 # |
310,000 | 320,025 | ||||||
Service Corp. International 4.625% 12/15/27 |
280,000 | 295,457 | ||||||
|
|
|||||||
1,922,391 | ||||||||
|
|
|||||||
Technology & Electronics 0.74% |
||||||||
Apple 2.20% 9/11/29 |
140,000 | 150,446 | ||||||
CDK Global |
||||||||
5.00% 10/15/24 |
161,000 | 171,563 | ||||||
5.875% 6/15/26 |
518,000 | 546,394 | ||||||
CDW Finance 5.00% 9/1/25 |
156,000 | 161,685 | ||||||
CommScope Technologies 144A 5.00% 3/15/27 # |
192,000 | 176,286 | ||||||
Global Payments |
||||||||
2.65% 2/15/25 |
135,000 | 141,987 | ||||||
3.20% 8/15/29 |
50,000 | 52,897 | ||||||
International Business Machines 3.30% 5/15/26 |
140,000 | 157,013 | ||||||
Iron Mountain US Holdings 144A 5.375% 6/1/26 # |
324,000 | 329,732 |
18
Principal amount° | Value (US $) | |||||||
Corporate Bonds (continued) |
||||||||
Technology & Electronics (continued) |
||||||||
NXP |
||||||||
144A 4.30% 6/18/29 # |
15,000 | $ | 16,497 | |||||
144A 4.875% 3/1/24 # |
90,000 | 99,637 | ||||||
Sensata Technologies UK Financing 144A |
||||||||
6.25% 2/15/26 # |
285,000 | 300,622 | ||||||
SS&C Technologies 144A 5.50% 9/30/27 # |
660,000 | 694,752 | ||||||
|
|
|||||||
2,999,511 | ||||||||
|
|
|||||||
Transportation 0.12% |
||||||||
Delta Air Lines 144A 7.00% 5/1/25 # |
220,000 | 227,615 | ||||||
FedEx 4.05% 2/15/48 |
140,000 | 136,636 | ||||||
Rutas 2 and 7 Finance 144A 3.413% 9/30/36 #^ |
200,000 | 127,059 | ||||||
|
|
|||||||
491,310 | ||||||||
|
|
|||||||
Utilities 0.97% |
||||||||
Calpine |
||||||||
144A 4.50% 2/15/28 # |
92,000 | 92,604 | ||||||
144A 5.25% 6/1/26 # |
443,000 | 460,018 | ||||||
Centrais Eletricas Brasileiras 144A 3.625% 2/4/25 # |
200,000 | 186,388 | ||||||
Duke Energy 4.875%µy |
85,000 | 85,909 | ||||||
Emera 6.75% 6/15/76 µ |
225,000 | 243,845 | ||||||
Empresas Publicas de Medellin 144A 4.25% 7/18/29 # |
387,000 | 381,799 | ||||||
Enel 144A 8.75% 9/24/73 #µ |
200,000 | 227,750 | ||||||
Entergy Louisiana 4.95% 1/15/45 |
5,000 | 5,442 | ||||||
Entergy Mississippi 2.85% 6/1/28 |
60,000 | 63,210 | ||||||
Entergy Texas 3.55% 9/30/49 |
115,000 | 126,029 | ||||||
Evergy 2.90% 9/15/29 |
160,000 | 167,489 | ||||||
Evergy Metro 3.65% 8/15/25 |
25,000 | 27,581 | ||||||
Infraestructura Energetica Nova 144A 3.75% 1/14/28 # |
205,000 | 194,967 | ||||||
MidAmerican Energy 3.15% 4/15/50 |
55,000 | 59,145 | ||||||
Mong Duong Finance Holdings 144A 5.125% 5/7/29 # |
500,000 | 493,523 | ||||||
National Rural Utilities Cooperative Finance |
||||||||
4.75% 4/30/43 µ |
5,000 | 4,997 | ||||||
5.25% 4/20/46 µ |
60,000 | 63,216 | ||||||
NextEra Energy Capital Holdings 5.65% 5/1/79 µ |
55,000 | 59,537 | ||||||
PacifiCorp 3.50% 6/15/29 |
75,000 | 86,166 | ||||||
Southern California Edison |
||||||||
4.00% 4/1/47 |
30,000 | 33,177 | ||||||
4.875% 3/1/49 |
45,000 | 55,648 | ||||||
Southwestern Electric Power 4.10% 9/15/28 |
165,000 | 186,362 | ||||||
Vistra Operations 144A 5.50% 9/1/26 # |
620,000 | 652,801 | ||||||
|
|
|||||||
3,957,603 | ||||||||
|
|
|||||||
Total Corporate Bonds (cost $51,615,336) |
52,048,419 | |||||||
|
|
19
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
Leveraged Non-Recourse Security 0.00% |
||||||||
JPMorgan Fixed Income Pass Through Trust Auction 144A |
||||||||
0.241% 1/15/87 #¨= |
1,300,000 | $ | 1,300 | |||||
|
|
|||||||
Total Leveraged Non-Recourse Security (cost $1,105,000) |
1,300 | |||||||
|
|
|||||||
Municipal Bonds 3.57% |
||||||||
Arizona Industrial Development Authority |
||||||||
(American Charter Schools Foundation Project) 144A |
||||||||
6.00% 7/1/47 # |
1,000,000 | 1,009,690 | ||||||
California State |
||||||||
(Various Purposes) 5.00% 11/1/43 |
500,000 | 561,300 | ||||||
California Statewide Communities Development Authority |
||||||||
(California Baptist University) Series A 6.375% 11/1/43 |
1,000,000 | 1,075,710 | ||||||
(Loma Linda University Medical Center) Series A 144A |
||||||||
5.25% 12/1/56 # |
500,000 | 508,080 | ||||||
Capital Trust Agency |
||||||||
(University Bridge, LLC Student Housing Project) Series |
||||||||
A 144A 5.25% 12/1/58 # |
1,000,000 | 882,840 | ||||||
City of Apple Valley, Minnesota |
||||||||
(Minnesota Senior Living Project) Series D 7.25% 1/1/52 |
1,000,000 | 743,380 | ||||||
City of Chicago, Illinois |
||||||||
(General Obligation Bonds Project) Series D |
||||||||
5.50% 1/1/40 |
500,000 | 510,665 | ||||||
Colorado Health Facilities Authority Revenue |
||||||||
(Catholic Health Initiatives) Series A 5.25% 1/1/45 |
750,000 | 840,810 | ||||||
Conley Road Transportation Development District, |
||||||||
Missouri |
||||||||
5.375% 5/1/47 |
500,000 | 466,695 | ||||||
Dallas/Fort Worth International Airport, Texas |
||||||||
Series H 5.00% 11/1/42 (AMT) |
500,000 | 517,645 | ||||||
Dominion Water & Sanitation District, Colorado |
||||||||
6.00% 12/1/46 |
1,000,000 | 1,037,390 | ||||||
Florida Development Finance Surface Transportation |
||||||||
Facilities Revenue |
||||||||
(Virgin Trains USA Passenger Rail Project) Series A 144A |
||||||||
6.50% 1/1/49 (AMT)#● |
1,150,000 | 977,500 | ||||||
Golden State Tobacco Securitization Settlement Revenue |
||||||||
Series A-1 5.25% 6/1/47 |
500,000 | 503,230 | ||||||
Illinois State |
||||||||
Series A 5.00% 4/1/38 |
100,000 | 100,071 | ||||||
Montgomery County Industrial Development Authority |
||||||||
Revenue |
||||||||
(Whitemarsh Continuing Care Retirement Community |
||||||||
Project) Series A 5.375% 1/1/51 |
250,000 | 220,008 |
20
Principal amount° | Value (US $) | |||||||
Municipal Bonds (continued) |
||||||||
New Jersey Transportation Trust Fund Authority |
||||||||
(Transportation Program Bonds) Series AA |
||||||||
5.00% 6/15/44 |
1,000,000 | $ | 1,016,130 | |||||
New York Liberty Development Revenue |
||||||||
(World Trade Center Project) Class 2 144A |
||||||||
5.15% 11/15/34 # |
500,000 | 504,535 | ||||||
Palm Beach County, Florida Health Facilities Authority |
||||||||
(Sinai Residences Boca Raton Project) |
||||||||
Series A 7.25% 6/1/34 |
65,000 | 67,638 | ||||||
Series A 7.50% 6/1/49 |
325,000 | 337,457 | ||||||
Puerto Rico Sales Tax Financing Revenue |
||||||||
Series A-1 4.55% 7/1/40 |
250,000 | 247,815 | ||||||
Series A-1 4.75% 7/1/53 |
1,880,000 | 1,833,978 | ||||||
Tobacco Settlement Financing |
||||||||
Subordinate Series B 5.00% 6/1/46 |
500,000 | 524,855 | ||||||
|
|
|||||||
Total Municipal Bonds (cost $14,646,745) |
14,487,422 | |||||||
|
|
|||||||
Non-Agency Commercial Mortgage-Backed Securities 0.56% |
||||||||
BANK |
||||||||
Series 2017-BNK5 B 3.896% 6/15/60 ● |
95,000 | 91,856 | ||||||
Series 2019-BN20 A3 3.011% 9/15/62 |
250,000 | 270,434 | ||||||
Benchmark Mortgage Trust |
||||||||
Series 2019-B9 A5 4.016% 3/15/52 |
250,000 | 287,337 | ||||||
CD Mortgage Trust |
||||||||
Series 2019-CD8 A4 2.912% 8/15/57 |
250,000 | 267,681 | ||||||
DB-JPM Mortgage Trust |
||||||||
Series 2016-C3 A5 2.89% 8/10/49 |
250,000 | 263,799 | ||||||
GRACE Mortgage Trust |
||||||||
Series 2014-GRCE A 144A 3.369% 6/10/28 # |
100,000 | 101,127 | ||||||
GS Mortgage Securities Trust |
||||||||
Series 2017-GS6 A3 3.433% 5/10/50 |
165,000 | 181,071 | ||||||
Series 2019-GC42 A4 3.001% 9/1/52 |
250,000 | 269,663 | ||||||
JPM-BB Commercial Mortgage Securities Trust |
||||||||
Series 2015-C33 A4 3.77% 12/15/48 |
500,000 | 547,674 | ||||||
|
|
|||||||
Total Non-Agency Commercial Mortgage-Backed Securities (cost $2,221,144) |
|
2,280,642 | ||||||
|
|
|||||||
Loan Agreement 0.11% |
||||||||
Frontier Communications Tranche B-1 5.35% (LIBOR01M |
||||||||
+ 3.75%) 6/17/24 ● |
460,815 | 454,191 | ||||||
|
|
|||||||
Total Loan Agreement (cost $448,359) |
454,191 | |||||||
|
|
21
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||||||
Sovereign Bonds 1.50%D |
||||||||||||
Azerbaijan 0.09% |
||||||||||||
Republic of Azerbaijan International Bond 144A |
||||||||||||
3.50% 9/1/32 # |
375,000 | $ | 357,654 | |||||||||
|
|
|||||||||||
357,654 | ||||||||||||
|
|
|||||||||||
Dominican Republic 0.04% |
||||||||||||
Dominican Republic International Bond 144A |
||||||||||||
4.50% 1/30/30 # |
200,000 | 174,377 | ||||||||||
|
|
|||||||||||
174,377 | ||||||||||||
|
|
|||||||||||
Egypt 0.05% |
||||||||||||
Egypt Government International Bond 144A |
||||||||||||
5.75% 5/29/24 # |
200,000 | 200,417 | ||||||||||
|
|
|||||||||||
200,417 | ||||||||||||
|
|
|||||||||||
Gabon 0.04% |
||||||||||||
Gabon Government International Bond 144A |
||||||||||||
6.625% 2/6/31 # |
200,000 | 167,969 | ||||||||||
|
|
|||||||||||
167,969 | ||||||||||||
|
|
|||||||||||
Georgia 0.05% |
||||||||||||
Georgia Government International Bond 6.875% 4/12/21 |
200,000 | 205,500 | ||||||||||
|
|
|||||||||||
205,500 | ||||||||||||
|
|
|||||||||||
Guatemala 0.05% |
||||||||||||
Guatemala Government Bond 144A 4.875% 2/13/28 # |
200,000 | 211,502 | ||||||||||
|
|
|||||||||||
211,502 | ||||||||||||
|
|
|||||||||||
Indonesia 0.08% |
||||||||||||
Indonesia Government International Bond 144A |
||||||||||||
4.125% 1/15/25 # |
300,000 | 324,714 | ||||||||||
|
|
|||||||||||
324,714 | ||||||||||||
|
|
|||||||||||
Israel 0.08% |
||||||||||||
Israel Government International Bond 2.75% 7/3/30 |
310,000 | 337,512 | ||||||||||
|
|
|||||||||||
337,512 | ||||||||||||
|
|
|||||||||||
Ivory Coast 0.03% |
||||||||||||
Ivory Coast Government International Bond 144A |
||||||||||||
6.875% 10/17/40 # |
EUR | 100,000 | 101,530 | |||||||||
|
|
|||||||||||
101,530 | ||||||||||||
|
|
|||||||||||
Kenya 0.05% |
||||||||||||
Kenya Government International Bond 144A |
||||||||||||
6.875% 6/24/24 # |
200,000 | 193,158 | ||||||||||
|
|
|||||||||||
193,158 | ||||||||||||
|
|
|||||||||||
Mongolia 0.09% |
||||||||||||
Development Bank of Mongolia 144A 7.25% 10/23/23 # |
200,000 | 182,000 | ||||||||||
Mongolia Government International Bond 144A |
||||||||||||
5.625% 5/1/23 # |
200,000 | 190,029 | ||||||||||
|
|
|||||||||||
372,029 | ||||||||||||
|
|
22
Principal amount° | Value (US $) | |||||||||||
Sovereign BondsD (continued) |
||||||||||||
North Macedonia 0.03% |
||||||||||||
North Macedonia Government International Bond 144A |
||||||||||||
3.675% 6/3/26 # |
EUR | 100,000 | $ | 113,348 | ||||||||
|
|
|||||||||||
113,348 | ||||||||||||
|
|
|||||||||||
Panama 0.04% |
||||||||||||
Panama Government International Bond 144A |
||||||||||||
3.75% 4/17/26 # |
155,000 | 162,047 | ||||||||||
|
|
|||||||||||
162,047 | ||||||||||||
|
|
|||||||||||
Paraguay 0.10% |
||||||||||||
Paraguay Government International Bond |
||||||||||||
144A 4.625% 1/25/23 # |
200,000 | 209,000 | ||||||||||
144A 4.95% 4/28/31 # |
200,000 | 215,625 | ||||||||||
|
|
|||||||||||
424,625 | ||||||||||||
|
|
|||||||||||
Peru 0.27% |
||||||||||||
Peruvian Government International Bond |
||||||||||||
2.392% 1/23/26 |
200,000 | 207,200 | ||||||||||
2.844% 6/20/30 |
835,000 | 885,985 | ||||||||||
|
|
|||||||||||
1,093,185 | ||||||||||||
|
|
|||||||||||
Russia 0.11% |
||||||||||||
Russian Foreign Bond - Eurobond 144A 4.25% 6/23/27 # |
400,000 | 451,650 | ||||||||||
|
|
|||||||||||
451,650 | ||||||||||||
|
|
|||||||||||
Serbia 0.07% |
||||||||||||
Serbia International Bond 144A 3.125% 5/15/27 # |
EUR | 250,000 | 291,430 | |||||||||
|
|
|||||||||||
291,430 | ||||||||||||
|
|
|||||||||||
Ukraine 0.15% |
||||||||||||
Ukraine Government International Bond 144A |
||||||||||||
7.75% 9/1/21 # |
584,000 | 590,631 | ||||||||||
|
|
|||||||||||
590,631 | ||||||||||||
|
|
|||||||||||
Uruguay 0.01% |
||||||||||||
Uruguay Government International Bond 4.50% 8/14/24 |
53,000 | 57,500 | ||||||||||
|
|
|||||||||||
57,500 | ||||||||||||
|
|
|||||||||||
Uzbekistan 0.07% |
||||||||||||
Republic of Uzbekistan Bond 144A 4.75% 2/20/24 # |
250,000 | 264,532 | ||||||||||
|
|
|||||||||||
264,532 | ||||||||||||
|
|
|||||||||||
Total Sovereign Bonds (cost $5,923,340) |
6,095,310 | |||||||||||
|
|
|||||||||||
Supranational Banks 0.12% |
||||||||||||
Banque Ouest Africaine de Developpement 144A |
||||||||||||
4.70% 10/22/31 # |
202,000 | 193,906 | ||||||||||
Central American Bank For Economic Integration 144A |
||||||||||||
2.00% 5/6/25 # |
300,000 | 302,850 | ||||||||||
|
|
|||||||||||
Total Supranational Banks (cost $501,958) |
496,756 | |||||||||||
|
|
23
Schedule of investments
Delaware Wealth Builder Fund
Principal amount° | Value (US $) | |||||||
US Treasury Obligations 0.69% |
||||||||
US Treasury Bonds |
||||||||
1.25% 5/15/50 |
45,000 | $ | 43,143 | |||||
4.50% 2/15/36 |
330,000 | 505,370 | ||||||
US Treasury Floating Rate Note |
||||||||
0.304% (USBMMY3M + 0.154%) 1/31/22 |
485,000 | 485,627 | ||||||
US Treasury Inflation Indexed Notes |
||||||||
0.125% 10/15/24 |
70,423 | 72,611 | ||||||
0.125% 1/15/30 |
471,518 | 500,671 | ||||||
US Treasury Notes |
||||||||
0.375% 4/30/25 |
635,000 | 637,245 | ||||||
1.50% 2/15/30 |
75,000 | 81,085 | ||||||
1.75% 12/31/24 |
2,700 | 2,880 | ||||||
2.00% 10/31/22 |
340,000 | 354,981 | ||||||
US Treasury Strip Principal |
||||||||
2.26% 5/15/44 ^ |
170,000 | 119,495 | ||||||
|
|
|||||||
Total US Treasury Obligations (cost $2,690,669) |
2,803,108 | |||||||
|
|
|||||||
Number of shares | ||||||||
Preferred Stock 0.51% |
||||||||
Bank of America 6.50% µ |
440,000 | 474,476 | ||||||
GMAC Capital Trust I 6.177% (LIBOR03M + 5.785%) |
5,000 | 112,950 | ||||||
Pebblebrook Hotel Trust 6.375% |
28,153 | 601,067 | ||||||
Taubman Centers 6.50% |
37,077 | 841,648 | ||||||
Washington Prime Group 6.875% |
4,840 | 31,944 | ||||||
|
|
|||||||
Total Preferred Stock (cost $2,329,618) |
2,062,085 | |||||||
|
|
|||||||
Short-Term Investments 2.78% |
||||||||
Money Market Mutual Funds 2.78% |
||||||||
BlackRock FedFund Institutional Shares (seven-day effective yield 0.11%) |
2,257,162 | 2,257,162 | ||||||
Fidelity Investments Money Market Government Portfolio Class I (seven-day effective yield 0.08%) |
2,257,162 | 2,257,162 | ||||||
GS Financial Square Government Fund Institutional Shares (seven-day effective yield 0.16%) |
2,257,162 | 2,257,162 | ||||||
Morgan Stanley Government Portfolio Institutional Share Class (seven-day effective yield 0.07%) |
2,257,162 | 2,257,162 | ||||||
State Street Institutional US Government Money Market Fund Investor Class (seven-day effective yield 0.05%) |
2,257,162 | 2,257,162 | ||||||
|
|
|||||||
Total Short-Term Investments (cost $11,285,810) |
11,285,810 | |||||||
|
|
|||||||
Total Value of Securities 99.49% |
$ | 404,156,447 | ||||||
|
|
24
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At May 31, 2020, the aggregate value of Rule 144A securities was $46,602,586, which represents 11.47% of the Funds net assets. See Note 9 in Notes to financial statements. |
¨ | 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. |
= | The value of this security was determined using significant unobservable inputs and is reported as a Level 3 security in the disclosure table located in Note 3 in Notes to financial statements. |
° | Principal amount shown is stated in USD unless noted that the security is denominated in another currency. |
D | Securities have been classified by country of origin. |
µ | Fixed to variable rate investment. The rate shown reflects the fixed rate in effect at May 31, 2020. Rate will reset at a future date. |
p | Restricted security. These investments are in securities not registered under the Securities Act of 1933, as amended, and have certain restrictions on resale which may limit their liquidity. At May 31, 2020, the aggregate value of restricted securities was $7,830,543, which represented 1.93% of the Funds net assets. See table on the next page for additional details on restricted securities. |
y | No contractual maturity date. |
| Non-income producing security. |
| Variable rate investment. Rates reset periodically. Rate shown reflects the rate in effect at May 31, 2020. For securities based on a published reference rate and spread, the reference rate and spread are indicated in their description above. The reference rate descriptions (i.e. LIBOR03M, LIBOR06M, etc.) used in this report are identical for different securities, but the underlying reference rates may differ due to the timing of the reset period. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions, or for mortgage-backed securities, are impacted by the individual mortgages which are paying off over time. These securities do not indicate a reference rate and spread in their description above. |
^ | Zero-coupon security. The rate shown is the effective yield at the time of purchase. |
25
Schedule of investments
Delaware Wealth Builder Fund
Restricted Securities
Investments |
Date of Acquisition |
Cost |
Value |
|||||||||
Merion Champions Walk |
8/4/17 | $ | 2,164,599 | $ | 2,130,378 | |||||||
Merion Champions Walk |
2/13/18 | 56,146 | 55,258 | |||||||||
Merion Champions Walk |
7/11/18 | 58,916 | 55,258 | |||||||||
Merion Champions Walk |
10/22/18 | 59,852 | 55,258 | |||||||||
Merion Champions Walk |
2/13/19 | 60,766 | 55,259 | |||||||||
Merion Countryside |
5/11/16 | | 1,677,649 | |||||||||
Merion Countryside |
4/7/17 | | 136,026 | |||||||||
Merion Countryside |
5/3/18 | | 75,570 | |||||||||
Merion The Ledges |
9/26/18 | 3,360,028 | 3,455,852 | |||||||||
Merion The Ledges |
9/12/19 | 139,318 | 134,035 | |||||||||
|
|
|
|
|||||||||
Total |
$ | 5,899,625 | $ | 7,830,543 | ||||||||
|
|
|
|
The following foreign currency exchange contracts, futures contracts and swap contracts were outstanding at May 31, 2020:1
Foreign Currency Exchange Contracts
Counterparty |
Currency to Receive (Deliver) |
In Exchange For |
Settlement Date |
Unrealized Appreciation |
Unrealized Depreciation |
|||||||||||||||||||||||
BNYM |
CHF | (5,460 | ) | USD | 5,664 | 6/3/20 | $ | | $ | (14 | ) | |||||||||||||||||
BNYM |
DKK | (21,925 | ) | USD | 3,268 | 6/3/20 | 3 | | ||||||||||||||||||||
BNYM |
EUR | (11,647 | ) | USD | 12,941 | 6/2/20 | 13 | | ||||||||||||||||||||
BNYM |
GBP | (2,891 | ) | USD | 3,568 | 6/2/20 | | (3 | ) | |||||||||||||||||||
BNYM |
JPY | (734,582 | ) | USD | 6,850 | 6/2/20 | 40 | | ||||||||||||||||||||
JPMCB |
EUR | 98,556 | USD | (108,947 | ) | 6/3/20 | 691 | | ||||||||||||||||||||
JPMCB |
EUR | (650,214 | ) | USD | 729,878 | 6/12/20 | 7,906 | | ||||||||||||||||||||
JPMCB |
EUR | 212,288 | USD | (230,460 | ) | 6/19/20 | 5,777 | | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total Foreign Currency Exchange Contracts |
|
$ | 14,430 | $ | (17 | ) | ||||||||||||||||||||||
|
|
|
|
Futures Contracts
Contracts to Buy (Sell) |
Notional Amount |
Notional Cost (Proceeds) |
Expiration Date |
Value/ Unrealized Appreciation |
Value/ Unrealized Depreciation |
Variation Margin Due from (Due to) Brokers |
||||||||||||||||||||
(8) |
US Treasury 10 yr Notes | $ | (1,112,500 | ) | $ | (1,111,043 | ) | 9/21/20 | $ | | $ | (1,457 | ) | $ | (3,250 | ) | ||||||||||
2 |
US Treasury 10 yr Ultra Notes | 314,656 | 314,114 | 9/21/20 | 542 | | 1,625 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total Futures Contracts |
$ | (796,929 | ) | $ | 542 | $ | (1,457 | ) | $ | (1,625 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
26
Swap Contracts
CDS Contracts2 Reference Obligation/ Termination Date/ Payment Frequency |
Notional Amount3 |
Annual Protection Payments |
Value |
Upfront Payments Paid (Received) |
Unrealized Appreciation4 |
Unrealized Depreciation4 |
Variation Margin Due from (Due to) Brokers |
|||||||||||||||||||||
Centrally Cleared/ Protection Purchased: |
||||||||||||||||||||||||||||
CDX.NA.HY.335 12/20/24- Quarterly |
10,450,000 | 5.00% | $ | 211,806 | $ | (554,192 | ) | $ | 765,998 | $ | | $ | (14,707 | ) | ||||||||||||||
Over-The-Counter/ Protection Purchased: |
||||||||||||||||||||||||||||
JPMCB-CDS 6/20/25-Quarterly |
797,000 | 1.00% | (3,533 | ) | 9,659 | | (13,192 | ) | | |||||||||||||||||||
JPMCB-Mexico 6/20/25-Quarterly |
817,000 | 1.00% | 30,419 | 59,072 | | (28,653 | ) | | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total CDS Contracts |
$ | 238,692 | $ | (485,461 | ) | $ | 765,998 | $ | (41,845 | ) | $ | (14,707 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
The use of foreign currency exchange contracts, futures contracts and swap contracts involve elements of market risk and risks in excess of the amounts disclosed in these financial statements. The foreign currency exchange contracts and notional amounts presented above represent the Funds total exposure in such contracts, whereas only the variation margin and net unrealized appreciation (depreciation) is reflected in the Funds net assets.
1See Note 6 in Notes to financial statements.
2A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded daily as unrealized appreciation or depreciation. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the CDS agreement.
3Notional amount shown is stated in USD unless noted that the swap is denominated in another currency.
4Unrealized appreciation (depreciation) does not include periodic interest payments on swap contracts accrued daily in the aggregate amount of $(86,162).
5Markits CDX.NA.HY Index is composed of one hundred (100) of the most liquid North American entities with high yield credit ratings that trade in the CDS market.
27
Schedule of investments
Delaware Wealth Builder Fund
Summary of abbreviations:
AMT Subject to Alternative Minimum Tax |
BB Barclays Bank |
BNYM The Bank of New York Mellon |
CDS Credit Default Swap |
CDX.NA.HY Credit Default Swap Index North America High Yield |
CHF Swiss Franc |
DB Deutsche Bank |
DKK Danish Krone |
EAFE Europe, Australasia and Far East |
ETF Exchange-Traded Fund |
EUR European Monetary Unit |
FTSE Financial Times Stock Exchange |
GBP British Pound Sterling |
GS Goldman Sachs |
ICE Intercontinental Exchange |
JPM JPMorgan |
JPMCB JPMorgan Chase Bank, National Association |
JPY Japanese Yen |
LIBOR London interbank offered rate |
LIBOR01M ICE LIBOR USD 1 Month |
LIBOR03M ICE LIBOR USD 3 Month |
LIBOR06M ICE LIBOR USD 6 Month |
MSCI Morgan Stanley Capital International |
REIT Real Estate Investment Trust |
S.F. Single Family |
SPDR S&P Depositary Receipts |
USBMMY3M US Treasury 3 Month Bill Money Market Yield |
USD US Dollar yr Year |
See accompanying notes, which are an integral part of the financial statements.
28
This page intentionally left blank.
Statement of assets and liabilities | ||
Delaware Wealth Builder Fund | May 31, 2020 (Unaudited) |
Assets: |
||||
Investments, at value1 |
$ | 404,156,447 | ||
Foreign currencies, at value2 |
72,437 | |||
Cash collateral due from broker |
862,796 | |||
Cash |
495,192 | |||
Dividends and interest receivable |
1,896,935 | |||
Receivable for fund shares sold |
662,450 | |||
Receivable for securities sold |
503,502 | |||
Foreign tax reclaims receivable |
359,419 | |||
Upfront payments on over the counter credit default swap contracts |
68,731 | |||
Unrealized appreciation on foreign currency exchange contracts |
14,430 | |||
|
|
|||
Total assets |
409,092,339 | |||
|
|
|||
Liabilities: |
||||
Payable for fund shares redeemed |
1,617,070 | |||
Variation margin due to broker on centrally cleared credit default swap contracts |
14,707 | |||
Payable for securities purchased |
456,567 | |||
Investment management fees payable to affiliates |
203,006 | |||
Swap payments payable |
109,224 | |||
Distribution fees payable to affiliates |
104,008 | |||
Cash collateral due to brokers |
90,000 | |||
Dividend disbursing and transfer agent fees and expenses payable to non-affiliates |
88,374 | |||
Other accrued expenses |
82,496 | |||
Reports and statements to shareholders expenses payable to affiliates |
56,617 | |||
Unrealized depreciation on over the counter credit default swap contracts |
41,845 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates |
3,292 | |||
Variation margin due to broker on futures contracts |
1,625 | |||
Trustees fees and expenses payable |
1,520 | |||
Accounting and administration expenses payable to affiliates |
1,515 | |||
Legal fees payable to affiliates |
1,139 | |||
Unrealized depreciation on foreign currency exchange contracts |
17 | |||
|
|
|||
Total liabilities |
2,873,022 | |||
|
|
|||
Total Net Assets |
$ | 406,219,317 | ||
|
|
|||
Net Assets Consist of: |
||||
Paid-in capital |
$ | 439,682,156 | ||
Total distributable earnings (loss) |
(33,462,839 | ) | ||
|
|
|||
Total Net Assets |
$ | 406,219,317 | ||
|
|
30
Net Asset Value |
||||
Class A: |
||||
Net assets |
$ | 216,574,052 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
17,441,061 | |||
Net asset value per share |
$ | 12.42 | ||
Sales charge |
5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 sales charge) |
$ | 13.18 | ||
Class C: |
||||
Net assets |
$ | 71,080,377 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
5,712,008 | |||
Net asset value per share |
$ | 12.44 | ||
Class R: |
||||
Net assets |
$ | 1,041,177 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
83,818 | |||
Net asset value per share |
$ | 12.42 | ||
Institutional Class: |
||||
Net assets |
$ | 117,523,711 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
9,467,237 | |||
Net asset value per share |
$ | 12.41 | ||
1 Investments, at cost |
$ | 409,963,857 | ||
2 Foreign currencies, at cost |
72,145 |
See accompanying notes, which are an integral part of the financial statements.
31
Statement of operations | ||
Delaware Wealth Builder Fund | Six months ended May 31, 2020 (Unaudited) |
Investment Income: |
||||
Dividends |
$ | 4,047,769 | ||
Interest |
2,851,437 | |||
Foreign tax withheld |
(26,752 | ) | ||
|
|
|||
6,872,454 | ||||
|
|
|||
Expenses: |
||||
Management fees |
1,476,454 | |||
Distribution expenses Class A |
293,137 | |||
Distribution expenses Class C |
410,847 | |||
Distribution expenses Class R |
3,009 | |||
Dividend disbursing and transfer agent fees and expenses |
228,590 | |||
Accounting and administration expenses |
57,902 | |||
Reports and statements to shareholders expenses |
50,689 | |||
Registration fees |
34,575 | |||
Audit and tax fees |
30,700 | |||
Custodian fees |
19,281 | |||
Trustees fees and expenses |
11,248 | |||
Legal fees |
7,924 | |||
Other |
30,956 | |||
|
|
|||
2,655,312 | ||||
Less expenses waived |
(35,269 | ) | ||
Less expenses paid indirectly |
(584 | ) | ||
|
|
|||
Total operating expenses |
2,619,459 | |||
|
|
|||
Net Investment Income |
4,252,995 | |||
|
|
32
Net Realized and Unrealized Gain (Loss): |
| |||
Net realized gain (loss) on: |
||||
Investments |
$ | (25,390,481 | ) | |
Foreign currencies |
(76,393 | ) | ||
Foreign currency exchange contracts |
(51,243 | ) | ||
Futures contracts |
110,535 | |||
Swap contracts |
491,548 | |||
|
|
|||
Net realized loss |
(24,916,034 | ) | ||
|
|
|||
Net change in unrealized appreciation (depreciation) of: |
||||
Investments |
(26,712,424 | ) | ||
Foreign currencies |
7,713 | |||
Foreign currency exchange contracts |
10,890 | |||
Futures contracts |
(245,081 | ) | ||
Swap contracts |
903,744 | |||
|
|
|||
Net change in unrealized appreciation (depreciation) |
(26,035,158 | ) | ||
|
|
|||
Net Realized and Unrealized Loss |
(50,951,192 | ) | ||
|
|
|||
Net Decrease in Net Assets Resulting from Operations |
$ | (46,698,197 | ) | |
|
|
See accompanying notes, which are an integral part of the financial statements.
33
Statements of changes in net assets | ||
Delaware Wealth Builder Fund |
Six months ended 5/31/20 (Unaudited) |
Year ended 11/30/19 |
|||||||
Increase (Decrease) in Net Assets from Operations: |
||||||||
Net investment income |
$ | 4,252,995 | $ | 20,526,365 | ||||
Net realized gain (loss) |
(24,916,034 | ) | 2,827,411 | |||||
Net change in unrealized appreciation (depreciation) |
(26,035,158 | ) | 16,534,872 | |||||
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations |
(46,698,197 | ) | 39,888,648 | |||||
|
|
|
|
|||||
Dividends and Distributions to Shareholders from: |
||||||||
Distributable earnings: |
||||||||
Class A |
(6,377,495 | ) | (22,227,219 | ) | ||||
Class C |
(1,961,744 | ) | (9,875,532 | ) | ||||
Class R |
(30,784 | ) | (152,030 | ) | ||||
Institutional Class |
(3,935,804 | ) | (15,088,656 | ) | ||||
|
|
|
|
|||||
(12,305,827 | ) | (47,343,437 | ) | |||||
|
|
|
|
|||||
Capital Share Transactions: |
||||||||
Proceeds from shares sold: |
||||||||
Class A |
9,324,821 | 26,721,168 | ||||||
Class C |
1,994,770 | 6,055,876 | ||||||
Class R |
186,678 | 180,663 | ||||||
Institutional Class |
7,927,111 | 22,726,766 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
6,044,794 | 21,081,563 | ||||||
Class C |
1,850,633 | 9,359,325 | ||||||
Class R |
30,783 | 151,066 | ||||||
Institutional Class |
3,584,435 | 13,671,291 | ||||||
|
|
|
|
|||||
30,944,025 | 99,947,718 | |||||||
|
|
|
|
34
Six months ended 5/31/20 (Unaudited) |
Year ended 11/30/19 |
|||||||
Capital Share Transactions (continued): |
||||||||
Cost of shares redeemed: |
||||||||
Class A |
$ | (28,511,469 | ) | $ | (59,772,304 | ) | ||
Class C |
(17,704,066 | ) | (54,997,396 | ) | ||||
Class R |
(296,298 | ) | (979,678 | ) | ||||
Institutional Class |
(30,977,108 | ) | (63,450,417 | ) | ||||
|
|
|
|
|||||
(77,488,941 | ) | (179,199,795 | ) | |||||
|
|
|
|
|||||
Decrease in net assets derived from capital share transactions |
(46,544,916 | ) | (79,252,077 | ) | ||||
|
|
|
|
|||||
Net Decrease in Net Assets |
(105,548,940 | ) | (86,706,866 | ) | ||||
Net Assets: |
||||||||
Beginning of period |
511,768,257 | 598,475,123 | ||||||
|
|
|
|
|||||
End of period |
$ | 406,219,317 | $ | 511,768,257 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
35
Financial highlights | ||
Delaware Wealth Builder Fund Class A |
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets6,7 |
Ratio of expenses to average net assets prior to fees waived6 |
Ratio of net investment income to average net assets8 |
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 return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. |
4 | Total return during the period shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 | General Motors term loan litigation was included in total return. If excluded, the impact on the total return would be 0.11% lower. See Note 11 in Notes to financial statements. |
6 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
7 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.09%, 1.09%, and 1.12%, respectively. |
8 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 2.40%, 2.51%, and 2.05%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
36
Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/31/201 | Year ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 14.01 | $ | 14.15 | $ | 14.62 | $ | 13.64 | $ | 13.16 | $ | 13.73 | |||||||||||||||||||||||||||||||||||||||||||
0.12 | 0.53 | 0.35 | 0.36 | 0.27 | 0.32 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1.36 | ) | 0.50 | (0.43 | ) | 0.98 | 0.52 | (0.58 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(1.24 | ) | 1.03 | (0.08 | ) | 1.34 | 0.79 | (0.26 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(0.16 | ) | (0.35 | ) | (0.34 | ) | (0.36 | ) | (0.31 | ) | (0.31 | ) | |||||||||||||||||||||||||||||||||||||||||||
(0.19 | ) | (0.82 | ) | (0.05 | ) | | | | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(0.35 | ) | (1.17 | ) | (0.39 | ) | (0.36 | ) | (0.31 | ) | (0.31 | ) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
$ | 12.42 | $ | 14.01 | $ | 14.15 | $ | 14.62 | $ | 13.64 | $ | 13.16 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(9.00% | )4 | 8.30% | 5 | (0.56% | ) | 9.90% | 6.11% | (1.91% | ) | |||||||||||||||||||||||||||||||||||||||||||||
$ | 216,574 | $ | 259,283 | $ | 273,384 | $ | 256,157 | $ | 270,324 | $ | 291,876 | |||||||||||||||||||||||||||||||||||||||||||
1.09% | 1.09% | 1.09% | 1.09% | 1.13% | 1.10% | |||||||||||||||||||||||||||||||||||||||||||||||||
1.11% | 1.09% | 1.09% | 1.09% | 1.13% | 1.10% | |||||||||||||||||||||||||||||||||||||||||||||||||
1.93% | 3.91% | 2.41% | 2.51% | 2.04% | 2.38% | |||||||||||||||||||||||||||||||||||||||||||||||||
1.91% | 3.91% | 2.41% | 2.51% | 2.04% | 2.38% | |||||||||||||||||||||||||||||||||||||||||||||||||
32% | 91% | 57% | 81% | 102% | 67% | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
37
Financial highlights
Delaware Wealth Builder Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets6,7 |
Ratio of expenses to average net assets prior to fees waived6 |
Ratio of net investment income to average net assets8 |
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 return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. |
4 | Total return during the period shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 | General Motors term loan litigation was included in total return. If excluded, the impact on the total return would be 0.11% lower. See Note 11 in Notes to financial statements. |
6 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
7 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.84%, 1.84%, and 1.87%, respectively. |
8 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.65%, 1.76%, and 1.30%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
38
Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/31/201 | Year ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 14.04 | $ | 14.18 | $ | 14.65 | $ | 13.66 | $ | 13.18 | $ | 13.75 | |||||||||||||||||||||||||||||||||||||||||||
0.08 | 0.43 | 0.24 | 0.25 | 0.17 | 0.22 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1.38 | ) | 0.49 | (0.43 | ) | 0.99 | 0.52 | (0.58 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(1.30 | ) | 0.92 | (0.19 | ) | 1.24 | 0.69 | (0.36 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(0.11 | ) | (0.24 | ) | (0.23 | ) | (0.25 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||||||||||||||||||||||||||||||||
(0.19 | ) | (0.82 | ) | (0.05 | ) | | | | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(0.30 | ) | (1.06 | ) | (0.28 | ) | (0.25 | ) | (0.21 | ) | (0.21 | ) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
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|
|||||||||||||||||||||||||||||||||||||||||||
$ | 12.44 | $ | 14.04 | $ | 14.18 | $ | 14.65 | $ | 13.66 | $ | 13.18 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(9.40% | )4 | 7.46% | 5 | (1.34% | ) | 9.13% | 5.30% | (2.63% | ) | |||||||||||||||||||||||||||||||||||||||||||||
$71,080 | $95,672 | $137,403 | $225,604 | $283,243 | $298,833 | |||||||||||||||||||||||||||||||||||||||||||||||||
1.84% | 1.84% | 1.84% | 1.84% | 1.88% | 1.85% | |||||||||||||||||||||||||||||||||||||||||||||||||
1.86% | 1.84% | 1.84% | 1.84% | 1.88% | 1.85% | |||||||||||||||||||||||||||||||||||||||||||||||||
1.18% | 3.17% | 1.66% | 1.76% | 1.29% | 1.63% | |||||||||||||||||||||||||||||||||||||||||||||||||
1.16% | 3.17% | 1.66% | 1.76% | 1.29% | 1.63% | |||||||||||||||||||||||||||||||||||||||||||||||||
32% | 91% | 57% | 81% | 102% | 67% | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
39
Financial highlights |
Delaware Wealth Builder Fund Class R |
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets6,7 |
Ratio of expenses to average net assets prior to fees waived6 |
Ratio of net investment income to average net assets8 |
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 return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
4 | Total return during the period shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 | General Motors term loan litigation was included in total return. If excluded, the impact on the total return would be 0.11% lower. See Note 11 in Notes to financial statements. |
6 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
7 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 1.34%, 1.34%, and 1.37%, respectively. |
8 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 2.15%, 2.26%, and 1.80%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
40
Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
5/31/201 | Year ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 14.02 | $ | 14.16 | $ | 14.62 | $ | 13.63 | $ | 13.16 | $ | 13.73 | |||||||||||||||||||||||||||||||||||||||||
0.11 | 0.49 | 0.31 | 0.32 | 0.24 | 0.29 | |||||||||||||||||||||||||||||||||||||||||||||||
(1.38 | ) | 0.50 | (0.42 | ) | 0.99 | 0.51 | (0.58 | ) | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
(1.27 | ) | 0.99 | (0.11 | ) | 1.31 | 0.75 | (0.29 | ) | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
(0.14 | ) | (0.31 | ) | (0.30 | ) | (0.32 | ) | (0.28 | ) | (0.28 | ) | |||||||||||||||||||||||||||||||||||||||||
(0.19 | ) | (0.82 | ) | (0.05 | ) | | | | ||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
(0.33 | ) | (1.13 | ) | (0.35 | ) | (0.32 | ) | (0.28 | ) | (0.28 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||
$ | 12.42 | $ | 14.02 | $ | 14.16 | $ | 14.62 | $ | 13.63 | $ | 13.16 | |||||||||||||||||||||||||||||||||||||||||
|
|
|
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|
|
|
|
|
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|
|
|||||||||||||||||||||||||||||||||||||||||
(9.19% | )4 | 8.02% | 5 | (0.78% | ) | 9.70% | 5.76% | (2.15% | ) | |||||||||||||||||||||||||||||||||||||||||||
$ | 1,041 | $ | 1,288 | $ | 1,968 | $ | 2,320 | $ | 3,229 | $ | 3,682 | |||||||||||||||||||||||||||||||||||||||||
1.34% | 1.34% | 1.34% | 1.34% | 1.38% | 1.35% | |||||||||||||||||||||||||||||||||||||||||||||||
1.36% | 1.34% | 1.34% | 1.34% | 1.38% | 1.35% | |||||||||||||||||||||||||||||||||||||||||||||||
1.68% | 3.66% | 2.16% | 2.26% | 1.79% | 2.13% | |||||||||||||||||||||||||||||||||||||||||||||||
1.66% | 3.66% | 2.16% | 2.26% | 1.79% | 2.13% | |||||||||||||||||||||||||||||||||||||||||||||||
32% | 91% | 57% | 81% | 102% | 67% | |||||||||||||||||||||||||||||||||||||||||||||||
|
41
Financial highlights |
Delaware Wealth Builder Fund Institutional Class |
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets6,7 |
Ratio of expenses to average net assets prior to fees waived6 |
Ratio of net investment income to average net assets8 |
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 return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
4 | Total return during the period shown reflects a waiver by the manager. Performance would have been lower had the waiver not been in effect. |
5 | General Motors term loan litigation was included in total return. If excluded, the impact on the total return would be 0.11% lower. See Note 11 in Notes to financial statements. |
6 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
7 | The ratios of expenses to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 0.84%, 0.84%, and 0.87%, respectively. |
8 | The ratios of net investment income to average net assets excluding interest expense and dividend expense for the years ended Nov. 30, 2018, 2017, and 2016 were 2.65%, 2.76%, and 2.30%, respectively. |
See accompanying notes, which are an integral part of the financial statements.
42
Six months ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
5/31/201 | Year ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | 14.01 | $ | 14.15 | $ | 14.63 | $ | 13.64 | $ | 13.16 | $ | 13.73 | |||||||||||||||||||||||||||||||||||||||||||
0.14 | 0.56 | 0.38 | 0.39 | 0.30 | 0.36 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1.38 | ) | 0.50 | (0.43 | ) | 0.99 | 0.52 | (0.58 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(1.24 | ) | 1.06 | (0.05 | ) | 1.38 | 0.82 | (0.22 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(0.17 | ) | (0.38 | ) | (0.38 | ) | (0.39 | ) | (0.34 | ) | (0.35 | ) | |||||||||||||||||||||||||||||||||||||||||||
(0.19 | ) | (0.82 | ) | (0.05 | ) | | | | ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(0.36 | ) | (1.20 | ) | (0.43 | ) | (0.39 | ) | (0.34 | ) | (0.35 | ) | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
$ | 12.41 | $ | 14.01 | $ | 14.15 | $ | 14.63 | $ | 13.64 | $ | 13.16 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
(8.96% | )4 | 8.59% | 5 | (0.37% | ) | 10.24% | 6.37% | (1.66% | ) | |||||||||||||||||||||||||||||||||||||||||||||
$ | 117,524 | $ | 155,525 | $ | 185,720 | $ | 201,285 | $ | 149,830 | $ | 147,133 | |||||||||||||||||||||||||||||||||||||||||||
0.84% | 0.84% | 0.84% | 0.84% | 0.88% | 0.85% | |||||||||||||||||||||||||||||||||||||||||||||||||
0.86% | 0.84% | 0.84% | 0.84% | 0.88% | 0.85% | |||||||||||||||||||||||||||||||||||||||||||||||||
2.18% | 4.16% | 2.66% | 2.76% | 2.29% | 2.63% | |||||||||||||||||||||||||||||||||||||||||||||||||
2.16% | 4.16% | 2.66% | 2.76% | 2.29% | 2.63% | |||||||||||||||||||||||||||||||||||||||||||||||||
32% | 91% | 57% | 81% | 102% | 67% | |||||||||||||||||||||||||||||||||||||||||||||||||
|
|
43
Notes to financial statements | ||
Delaware Wealth Builder Fund | May 31, 2020 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Wealth Builder Fund, Delaware Small Cap Core Fund, and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Wealth Builder Fund (Fund). The Fund is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended (1940 Act), 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), instead of a front-end sales charge, of 1.00%, if redeemed during the first year, and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, which will be incurred 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.
1. Significant Accounting Policies
The Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services Investment Companies. The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Fund.
Security Valuation Equity securities and exchange-traded funds (ETFs), except those traded on the Nasdaq Stock Market LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity securities and ETFs traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If, on a particular day, an equity security or ETF does not trade, the mean between the bid and ask prices will be used, which approximates fair value. Equity securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. Other debt securities and credit default swap contracts are valued based upon valuations provided by an independent pricing service or broker/counterparty and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. For asset-backed securities, collateralized mortgage obligations, commercial mortgage securities and US government agency mortgage securities, pricing vendors utilize matrix pricing which considers prepayment speed; attributes of the collateral; yield or price of bonds of comparable quality, coupon, maturity, and type as well as broker/dealer-supplied prices. Swap prices are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades, and values of the underlying reference instruments. Foreign currency exchange contracts are valued at the mean between the bid and ask prices, which approximates fair value. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Futures contracts are valued at the daily quoted settlement prices. Open-end investment companies are valued at their published net asset value (NAV). 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
44
direction of the Trusts 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-US markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00pm Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. Whenever such a significant event occurs, the Fund may value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing). Restricted securities are valued at fair value using methods approved by the Board.
Federal and Foreign Income Taxes No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the 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 or expected to be taken on the Funds federal income tax returns through the six months ended May 31, 2020 and for all open tax years (years ended Nov. 30, 2017Nov. 30, 2019), and has concluded that no provision for federal income tax is required in the Funds financial statements. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries in which it invests that may date back to the inception of the Fund. If applicable, the Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in Other on the Statement of operations. During the six months ended May 31, 2020, the Fund did not incur any interest or tax penalties.
Class Accounting Investment income, common expenses, and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class.
Underlying Funds The Fund may invest in other investment companies (Underlying Funds) to the extent permitted by the 1940 Act. The Underlying Funds in which the Fund invests include ETFs. The Fund will indirectly bear the investment management fees and other expenses of the Underlying Funds.
Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Funds prospectus. The value of all assets and liabilities denominated in foreign currencies is translated daily into US dollars at the exchange rate of such currencies against the US dollar. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund generally bifurcates that portion of realized gains and losses on investments in debt securities which is due to changes in foreign exchange rates from that which is due to changes in market prices of debt securities. That portion of gains (losses), attributable to changes in foreign exchange rates, is included on the Statement of operations under Net realized gain (loss) on foreign currencies. For foreign equity securities, these changes are included
45
Notes to financial statements
Delaware Wealth Builder Fund
1. Significant Accounting Policies (continued)
on the Statement of operations under Net realized and unrealized gain (loss) on investments. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Realized gain (loss) on paydowns of asset- and mortgage-backed securities are classified as interest income. Distributions received from investments in real estate investment trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. Distributions received from investments in master limited partnerships are recorded as return of capital on investments. Foreign dividends are also recorded on 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 Funds understanding of the applicable countrys tax rules and rates. The Fund declares and pays dividends from net investment income monthly and distributions from net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement are included on the Statement of operations under Custodian fees with the corresponding expenses offset included under Less expenses paid indirectly. For the six months ended May 31, 2020, the Fund earned $257 under this arrangement.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expenses paid under this arrangement are included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses with the corresponding expenses offset included under Less expenses paid indirectly. For the six months ended May 31, 2020, the Fund earned $327 under this arrangement.
46
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the rates of 0.65% on the first $500 million of average daily net assets of the Fund, 0.60% on the next $500 million, 0.55% on the next $1.5 billion, and 0.50% on average daily net assets in excess of $2.5 billion.
DMC has contractually agreed to waive all or a portion, if any, of its management fee and/or pay/reimburse the Fund to the extent necessary to ensure total annual operating expenses (excluding any distribution and service (12b-1) fees, acquired fund fees and expenses, taxes, interest, short sale dividend and interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) from exceeding 0.83% of the Funds average daily net assets from March 27, 2020 through March 31, 2021.* For purposes of these waivers and reimbursements, nonroutine expenses may also include such additional costs and expenses as may be agreed upon from time to time by the Board and DMC. These expense waivers and reimbursements apply to expenses paid directly to the Fund and may only be terminated by agreement of DMC and the Fund. The waivers and reimbursements are accrued daily and received monthly.
DMC may seek investment advice and recommendations from its affiliates: Macquarie Investment Management Europe Limited, Macquarie Investment Management Austria Kapitalanlage AG, and Macquarie Investment Management Global Limited (MIMGL) (together, the Affiliated Sub-Advisors). The Manager may also permit these Affiliated Sub-Advisors to execute Fund security trades on behalf of the Manager and exercise investment discretion for securities in certain markets where DMC believes it will be beneficial to utilize an Affiliated Sub-Advisors specialized market knowledge. DMC may permit its affiliates, MIMGL and Macquarie Funds Management Hong Kong Limited, to execute Fund security trades on behalf of the Manager. DMC may also seek quantitative support from MIMGL. Although the Affiliated Sub-Advisors serve as sub-advisors, DMC has ultimate responsibility for all investment advisory services. For these services, DMC, not the Fund, pays each Affiliated Sub-Advisor a portion of its investment management fee.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administrative oversight services to the Fund. For these services, DIFSCs fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rates: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of the remainder of the Total Fee on a relative NAV basis. This amount is included on the Statement of operations under Accounting and administration expenses. For the six months ended May 31, 2020, the Fund was charged $9,745 for these services.
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSCs fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average
47
Notes to financial statements
Delaware Wealth Builder Fund
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates (continued)
daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. This amount is included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses. For the six months ended May 31, 2020, the Fund was charged $20,837 for these services. Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are paid by the Fund and are also included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses. The fees that are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual 12b-1 fee of 0.25%, 1.00%, and 0.50% of the average daily net assets of the Class A, Class C, and Class R shares, respectively. The fees are calculated daily and paid monthly. Institutional Class shares do not pay 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2020, the Fund was charged $9,206 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates employees. This amount is included on the Statement of operations under Legal fees.
For the six months ended May 31, 2020, DDLP earned $6,888 for commissions on sales of the Funds Class A shares. For the six months ended May 31, 2020, DDLP received gross CDSC commissions of $227 and $10,837 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, DIFSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
In addition to the management fees and other expenses of the Fund, the Fund indirectly bears the investment management fees and other expenses of the investment companies (Underlying Funds) in which it invests. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Funds and the number of shares that are owned of the Underlying Funds at different times.
Cross trades for the six months ended May 31, 2020 were executed by the Fund pursuant to procedures adopted by the Board designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At its regularly scheduled meetings, the Board reviews such transactions for
48
compliance with the procedures adopted by the Board. Pursuant to these procedures, for the six months ended May 31, 2020, the Fund engaged in Rule 17a-7 securities sales of $3,527,727, which resulted in net realized gain of $347,235.
* The aggregate contractual waiver period covering this report is from March 27, 2020 through March 31, 2021.
3. Investments
For the six months ended May 31, 2020, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases other than US government securities |
$ | 127,390,335 | ||
Purchases of US government securities |
11,777,197 | |||
Sales other than US government securities |
171,040,833 | |||
Sales of US government securities |
16,094,857 |
At May 31, 2020, the cost and unrealized appreciation (depreciation) of investments and derivatives for federal income tax purposes have been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2020, the cost and unrealized appreciation (depreciation) of investments and derivatives for the Fund were as follows:
Cost of investments and derivatives |
$ | 409,618,172 | ||
|
|
|||
Aggregate unrealized appreciation of investments and derivatives |
$ | 21,636,497 | ||
Aggregate unrealized depreciation of investments and derivatives |
(26,846,032 | ) | ||
|
|
|||
Net unrealized depreciation of investments and derivatives |
$ | (5,209,535 | ) | |
|
|
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entitys own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The 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 and on the next page.
Level 1 | Inputs are quoted prices in active markets for identical investments. (Examples: equity securities, open-end investment companies, futures contracts, and 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 |
49
Notes to financial statements
Delaware Wealth Builder Fund
3. Investments (continued)
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, and 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 and 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.
50
The table below and on the following page summarizes the valuation of the Funds investments by fair value hierarchy levels as of May 31, 2020:
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Securities |
||||||||||||||||
Assets: |
||||||||||||||||
Common Stock |
$ | 249,778,994 | $ | | $ | | $ | 249,778,994 | ||||||||
Exchange-Traded Funds |
5,057,899 | | | 5,057,899 | ||||||||||||
Limited Partnerships |
| | 7,830,543 | 7,830,543 | ||||||||||||
Convertible Preferred Stock1 |
4,896,229 | 4,383,699 | | 9,279,928 | ||||||||||||
Corporate Debt |
| 89,523,935 | | 89,523,935 | ||||||||||||
Leveraged Non-Recourse Security |
| | 1,300 | 1,300 | ||||||||||||
Municipal Bonds |
| 14,487,422 | | 14,487,422 | ||||||||||||
Agency, Asset-Backed and Mortgage-Backed Securities |
| 4,999,166 | | 4,999,166 | ||||||||||||
Loan Agreements |
| 454,191 | | 454,191 | ||||||||||||
Foreign Debt |
| 6,592,066 | | 6,592,066 | ||||||||||||
US Treasury Obligations |
| 2,803,108 | | 2,803,108 | ||||||||||||
Preferred Stock1 |
1,587,609 | 474,476 | | 2,062,085 | ||||||||||||
Short-Term Investments |
11,285,810 | | | 11,285,810 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Value of Securities |
$ | 272,606,541 | $ | 123,718,063 | $ | 7,831,843 | $ | 404,156,447 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Derivatives2 |
||||||||||||||||
Assets: |
||||||||||||||||
Foreign Currency Exchange Contracts |
$ | | $ | 14,430 | $ | | $ | 14,430 | ||||||||
Futures Contracts |
542 | | | 542 | ||||||||||||
Swap Contract |
| 765,998 | | 765,998 | ||||||||||||
Liabilities: |
||||||||||||||||
Foreign Currency Exchange Contracts |
$ | | $ | (17 | ) | $ | | $ | (17 | ) | ||||||
Futures Contracts |
(1,457 | ) | | | (1,457 | ) | ||||||||||
Swap Contracts |
| (41,845 | ) | | (41,845 | ) |
1Security type is valued across multiple levels. Level 1 investments represent exchange-traded investments, Level 2 investments represent investments with observable inputs or matrix-priced investments, and Level 3 investments represent investments without observable inputs. The amounts attributed to Level 1 investments, Level 2 investments, and Level 3 investments represent the following percentages of the total value of these security types:
Level 1 |
Level 2 |
Total |
||||||||||||||||||
Convertible Preferred Stock |
52.76 | % | 47.24 | % | 100.00 | % | ||||||||||||||
Preferred Stock |
76.99 | % | 23.01 | % | 100.00 | % |
2Futures contracts and swap contracts are valued at the unrealized appreciation (depreciation) on the instrument at the period end.
51
Notes to financial statements
Delaware Wealth Builder Fund
3. Investments (continued)
The securities that have been valued at zero on the Schedule of investments are considered to be Level 3 investments in this table.
During the six months ended May 31, 2020, 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 Funds NAV is determined) are established using a separate pricing feed from a third-party vendor designed to establish a price for each such security as of the time that the Funds NAV is determined. Further, international fair value pricing uses other observable market-based inputs in place of the closing exchange price due to the events occurring after the close of the exchange or market on which the investment is principally traded, causing a change in classification between levels. The Funds policy is to recognize transfers between levels based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to the Funds net assets.
The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value for the Fund:
Limited Partnerships |
Leveraged Non- Recourse Security |
Loan Agreements | Total | |||||||||||||||||||||
Ending balance Nov. 30, 2019 |
$7,830,543 | $1,300 | $ | $7,831,843 | ||||||||||||||||||||
Ending balance May 31, 2020 |
$7,830,543 | $1,300 | $ | $7,831,843 |
When market quotations are not readily available for one or more portfolio securities, the FundsNAV shall be calculated by using the fair value of the securities as determined by the Pricing Committee. Such fair value is the amount that the Fund might reasonably expect to receive for the security (or asset) upon its current sale. Each such determination should be based on a consideration of all relevant factors, which are likely to vary from one pricing context to another. Examples of such factors may include, but are not limited to: (i) the type of security, (ii) the size of the holding, (iii) the initial cost of the security, (iv) the existence of any contractual restrictions of the securitys disposition, (v) the price and extent of public trading in similar securities of the issuer or of comparable companies, (vi) quotations or evaluated prices from broker/dealers and/or pricing services, (vii) information obtained from the issuer, analysts, and/or appropriate stock exchange (for exchange-traded securities), (viii) an analysis of the companys financial statements, and (ix) an evaluation of the forces that influence the issuer and the market(s) in which the security is purchased and sold.
52
The Pricing Committee, or its delegate, employs various methods for calibrating these valuation approaches, including due diligence of the Funds pricing vendors and periodic back-testing of the prices that are fair valued under these procedures and reviews of any market related activity. The pricing of all securities fair valued by the Pricing Committee is subsequently reported to and approved by the Board on a quarterly basis.
Quantitative information about Level 3 fair value measurements for the Fund are as follows:
Assets |
Value | Valuation Techniques |
Unobservable Inputs | |||||||||||||||
Limited Partnership |
$ | 7,830,543 | Market cap rate method |
Trailing 12 months NOI, adjusted for assets and liabilities; liquidity discount | ||||||||||||||
Leverage | ||||||||||||||||||
Non-Recourse Security |
1,300 | Valued by third party |
Unadjusted price provided by third party | |||||||||||||||
|
|
|||||||||||||||||
Total |
$ | 7,831,843 | ||||||||||||||||
|
|
A significant change to the inputs may result in a significant change to the valuation.
53
Notes to financial statements
Delaware Wealth Builder Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended 5/31/20 |
Year ended 11/30/19 |
|||||||||||
Shares sold: |
||||||||||||
Class A |
728,746 | 1,964,437 | ||||||||||
Class C |
148,397 | 450,690 | ||||||||||
Class R |
14,336 | 13,428 | ||||||||||
Institutional Class |
610,341 | 1,688,057 | ||||||||||
Shares issued upon reinvestment of dividends and distributions: |
||||||||||||
Class A |
454,296 | 1,666,341 | ||||||||||
Class C |
137,324 | 744,080 | ||||||||||
Class R |
2,311 | 11,990 | ||||||||||
Institutional Class |
269,442 | 1,080,956 | ||||||||||
|
|
|
|
|||||||||
2,365,193 | 7,619,979 | |||||||||||
|
|
|
|
|||||||||
Shares redeemed: |
||||||||||||
Class A |
(2,244,537 | ) | (4,444,226 | ) | ||||||||
Class C |
(1,386,892 | ) | (4,072,093 | ) | ||||||||
Class R |
(24,740 | ) | (72,569 | ) | ||||||||
Institutional Class |
(2,514,048 | ) | (4,791,380 | ) | ||||||||
|
|
|
|
|||||||||
(6,170,217 | ) | (13,380,268 | ) | |||||||||
|
|
|
|
|||||||||
Net decrease |
(3,805,024 | ) | (5,760,289 | ) | ||||||||
|
|
|
|
Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the table above and on the Statements of changes in net assets. For the six months ended May 31, 2020 and year ended Nov. 30, 2019, the Fund had the following exchange transactions:
Exchange Redemptions |
Exchange Subscriptions |
|||||||||||||||||||||||||||||||||||
Class A Shares |
Class C Shares |
Class A Shares |
Institutional Class Shares |
Value | ||||||||||||||||||||||||||||||||
Six months ended 5/31/20 |
4,837 | 27,339 | 24,142 | 8,079 | $ | 411,047 | ||||||||||||||||||||||||||||||
Year ended 11/30/19 |
15,392 | 61,229 | 48,707 | 28,025 | 1,042,765 |
54
5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $220,000,000 revolving line of credit intended 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 0.15%, which was allocated across the Participants based on a weighted average of the respective net assets of each Participant. 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. 4, 2019.
On Nov. 4, 2019, the Participants entered into an amendment to the agreement for a $250,000,000 revolving line of credit. The revolving line of credit available was increased to $275,000,000 on May 6, 2020. The revolving 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 expires on Nov. 2, 2020.
The Fund had no amounts outstanding as of May 31, 2020, or at any time during the period then ended.
6. Derivatives
US GAAP requires disclosures that enable investors to understand: (1) how and why an entity uses derivatives; (2) how they are accounted for; and (3) how they affect an entitys results of operations and financial position.
Foreign Currency Exchange Contracts The Fund may enter into foreign currency exchange contracts and foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the US dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also enter these contracts to hedge the US dollar value of securities it already owns that are denominated in foreign currencies. In addition, the Fund may enter into these contracts to facilitate or expedite the settlement of portfolio transactions. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts and foreign cross currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts. The Funds 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 Funds exposure to the counterparty.
55
Notes to financial statements
Delaware Wealth Builder Fund
6. Derivatives (continued)
During the six months ended May 31, 2020, the Fund entered into foreign currency exchange contracts to hedge the US dollar value of securities it already owns that are denominated in foreign currencies and to fix the US dollar value of a security between trade date and settlement date.
Futures Contracts A futures contract is an agreement in which the writer (or seller) of the contract agrees to deliver to the buyer an amount of cash or securities equal to a specific dollar amount times the difference between the value of a specific security or index at the close of the last trading day of the contract and the price at which the agreement is made. The Fund may use futures contracts in the normal course of pursuing its investment objective. The Fund may invest in futures contracts to hedge its existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions. Upon entering into a futures contract, the Fund deposits cash or pledges US government securities to a broker, equal to the minimum initial margin requirements of the exchange on which the contract is traded. Subsequent payments are received from the broker or paid to the broker each day, based on the daily fluctuation in the market value of the contract. These receipts or payments are known as variation margin and are recorded daily by the Fund as unrealized gains or losses until the contracts are closed. When the contracts are closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was 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 exchanges clearinghouse, as counterparty to all exchange-traded futures, guarantees against default. At May 31, 2020, the Fund posted $11,053 in cash as margin for open futures contracts, which is included in Cash collateral due from broker on the Statement of assets and liabilities.
During the six months ended May 31, 2020, the Fund used futures contracts to hedge the Funds existing portfolio securities against fluctuations in value caused by changes in interest rates or market conditions and as a cash management tool.
Swap Contracts The Fund may enter into CDS contracts in the normal course of pursuing its investment objective. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets. The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty, combined with any credit enhancements, is rated at least BBB- by Standard & Poors Financial Services LLC (S&P) or Baa3 by Moodys Investors Service, Inc. (Moodys) or is determined to be of equivalent credit quality by DMC.
Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in 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,
56
the seller of protection would pay the par (or other agreed-upon) value of the reference security (or basket of securities) to the counterparty. Credit events generally include, among others, bankruptcy, failure to pay, and obligation default.
During the six months ended May 31, 2020, the Fund entered into CDS contracts as a purchaser of protection. Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded daily as unrealized appreciation or depreciation. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. Initial margin and variation margin are posted to central counterparties for central cleared CDS basket trades, as determined by the applicable central counterparty. During the six months ended May 31, 2020, the Fund did not enter into any CDS contracts as a seller of protection.
CDS contracts may involve greater risks than if the Fund had invested in the reference obligation directly. CDS contracts are subject to general market risk, liquidity risk, counterparty risk, and credit risk. The Funds maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by (1) for bilateral swap contracts, having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Funds exposure to the counterparty, and (2) for cleared swaps, trading these instruments through a central counterparty.
During the six months ended May 31, 2020, the Fund used CDS contracts to hedge against credit events and to gain exposure to certain securities or markets.
Swaps Generally. The value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the contract on a given day. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument, or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts shown on the Schedule of investments.
At May 31, 2020, the Fund posted $851,743 in cash collateral for open centrally cleared credit default swap contracts, which is included in Cash collateral due from brokers on the Statement of assets and liabilities. The Fund received $90,000 in cash collateral for open over-the-counter credit default swap contracts, which is included in Cash collateral due to brokers on the Statement of assets and liabilities.
57
Notes to financial statements
Delaware Wealth Builder Fund
6. Derivatives (continued)
Fair values of derivative instruments as of May 31, 2020 were as follows:
Asset Derivatives Fair Value | ||||||||||||||||||||
Statement of Assets and Liabilities Location |
Currency Contracts |
Interest Rate Contracts |
Credit Contracts |
Total | ||||||||||||||||
Unrealized appreciation on foreign currency exchange contracts |
$ | 14,430 | $ | | $ | | $ | 14,430 | ||||||||||||
Variation margin due from broker on futures contracts* |
| 542 | | 542 | ||||||||||||||||
Variation margin due from broker on centrally cleared credit default swap contracts* |
| | 765,998 | 765,998 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 14,430 | $ | 542 | $ | 765,998 | $ | 780,970 | ||||||||||||
|
|
|
|
|
|
|
|
Liability Derivatives Fair Value | ||||||||||||||||||||
Statement of Assets and Liabilities Location |
Currency Contracts |
Interest Rate Contracts |
Credit Contracts |
Total | ||||||||||||||||
Unrealized depreciation on foreign currency exchange contracts |
$ | 17 | $ | | $ | | $ | 17 | ||||||||||||
Variation margin due to broker on futures contracts* |
| 1,457 | | 1,457 | ||||||||||||||||
Unrealized depreciation on over the counter credit default swap contracts |
| | 41,845 | 41,845 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 17 | $ | 1,457 | $ | 41,845 | $ | 43,319 | ||||||||||||
|
|
|
|
|
|
|
|
*Includes cumulative appreciation/depreciation of futures and centrally cleared CDS contracts from the date the contracts were opened through May 31, 2020. Only current day variation margin is reported on the Statement of assets and liabilities.
58
The effect of derivative instruments on the Statement of operations for the six months ended May 31, 2020 was as follows:
Net Realized Gain (Loss) on: | ||||||||||||||||
Foreign Currency Exchange Contracts |
Futures Contracts |
Swap Contracts |
Total |
|||||||||||||
Currency contracts |
$ | (51,243 | ) | $ | | $ | | $ | (51,243 | ) | ||||||
Interest rate contracts |
| (82,346 | ) | | (82,346 | ) | ||||||||||
Equity contracts |
| 192,881 | | 192,881 | ||||||||||||
Credit contracts |
| | 491,548 | 491,548 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | (51,243 | ) | $ | 110,535 | $ | 491,548 | $ | 550,840 | |||||||
|
|
|
|
|
|
|
|
Net Change in Unrealized Appreciation (Depreciation) of: | ||||||||||||||||
Foreign Currency Exchange Contracts |
Futures Contracts |
Swap Contracts |
Total |
|||||||||||||
Currency contracts |
$ | 10,890 | $ | | $ | | $ | 10,890 | ||||||||
Interest rate contracts |
| (218 | ) | | (218 | ) | ||||||||||
Equity contracts |
| (244,863 | ) | | (244,863 | ) | ||||||||||
Credit contracts |
| | 903,744 | 903,744 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 10,890 | $ | (245,081 | ) | $ | 903,744 | $ | 669,553 | |||||||
|
|
|
|
|
|
|
|
Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the six months ended May 31, 2020:
Long Derivatives Volume |
Short Derivatives Volume |
|||||||
Foreign currency exchange contracts (average cost) |
$ | 378,708 | $ | 1,044,649 | ||||
Futures contracts (average notional value) |
729,351 | 1,044,562 | ||||||
CDS contracts (average notional value)* |
12,020,927 | |
*Long represents buying protection and short represents selling protection.
7. Offsetting
The Fund entered into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or a similar agreement with certain of its derivative contract counterparties in order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk. 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
59
Notes to financial statements
Delaware Wealth Builder Fund
7. Offsetting (continued)
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 on the Statement of assets and liabilities.
At May 31, 2020, 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 | ||||||||||||
The Bank of New York Mellon |
$ | 56 | $ | (17 | ) | $ | 39 | ||||||||
JPMorgan Chase Bank |
14,374 | | 14,374 | ||||||||||||
|
|
|
|
|
|
||||||||||
Total |
$ | 14,430 | $ | (17 | ) | $ |
14,413 |
||||||||
|
|
|
|
|
|
Counterparty |
Net Position |
Fair Value of Non-Cash Collateral Received |
Cash Collateral Received |
Fair Value of Non-Cash Collateral Pledged |
Cash Collateral Pledged |
Net Exposure(a) | ||||||||||||||||||||||||
The Bank of New York Mellon |
$ | 39 | $ | | $ | | $ | | $ | | $ | 39 | ||||||||||||||||||
JPMorgan Chase |
||||||||||||||||||||||||||||||
Bank |
14,374 | | | | | 14,374 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total |
$ | 14,413 | $ | | $ | | $ | | $ | | $ | 14,413 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(a)Net exposure represents the receivable (payable) that would be due from (to) the counterparty in the event of default.
8. Securities Lending
The Fund, along with other funds in the Delaware Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day, the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day, which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day, may be more or less than the value of the security on loan. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
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Cash collateral received by each fund of the Trust is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities, or establishments; obligations of supranational organizations; commercial paper, notes, bonds, and other debt obligations; certificates of deposit, time deposits, and other bank obligations; and asset-backed securities. The Fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the 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 Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of the Funds cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 2020, the Fund had no securities out on loan.
9. Credit and Market Risk
When interest rates rise, fixed income securities (i.e. debt obligations) generally will decline in value. These declines in value are greater for fixed income securities with longer maturities or durations.
The risk that potential changes related to the use of the London interbank offered rate (LIBOR) could have adverse impacts on financial instruments which reference LIBOR. The potential abandonment of LIBOR could affect the value and liquidity of instruments which reference LIBOR.
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 countrys balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad.
61
Notes to financial statements
Delaware Wealth Builder Fund
9. Credit and Market Risk (continued)
The securities exchanges of certain foreign markets are substantially smaller, less liquid, and more volatile than the major securities markets in the US. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.
The Fund invests a portion of its assets in high yield fixed income securities, which are securities rated lower than BBB- by S&P and Baa3 by Moodys, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.
The Fund invests in fixed income securities whose value is derived from an underlying pool of mortgages or consumer loans. The value of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults, and may be adversely affected by shifts in the markets perception of the issuers and changes in interest rates. Investors receive principal and interest payments as the underlying mortgages and consumer loans are paid back. Some of these securities are collateralized mortgage obligations (CMOs). CMOs are debt securities issued by US government agencies or by financial institutions and other mortgage lenders, which are collateralized by a pool of mortgages held under an indenture. Prepayment of mortgages may shorten the stated maturity of the obligations and can result in a loss of premium, if any has been paid. Certain of these securities may be stripped (securities which provide only the principal or interest feature of the underlying security). The yield to maturity on an interest-only CMO is extremely sensitive not only to changes in prevailing interest rates, but also to the rate of principal payments (including prepayments) on the related underlying mortgage assets. A rapid rate of principal payments may have a material adverse effect on the Funds yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in these securities even if the securities are rated in the highest rating categories.
The Fund invests in REITs and is subject to the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the six months ended May 31, 2020. The Funds REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations. The Fund also invests in real estate acquired as a result of ownership of securities or other instruments, including issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein. These instruments may include interests in private equity limited partnerships or limited liability companies that hold real estate investments (Real Estate Limited Partnerships). The Fund will limit its investments in Real Estate Limited Partnerships to 5% of its total assets at the time of purchase. The unfunded commitment for the limited partnerships totaled $582,748.
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The Fund invests in certain obligations that may have liquidity protection designed to ensure that the receipt of payments due on the underlying security is timely. Such protection may be provided through guarantees, insurance policies, or letters of credit obtained by the issuer or sponsor through third parties, through various means of structuring the transaction, or through a combination of such approaches. The Fund will not pay any additional fees for such credit support, although the existence of credit support may increase the price of a security.
The Fund invests in bank loans and other securities that may subject it to direct indebtedness risk, the risk that the Fund will not receive payment of principal, interest, and other amounts due in connection with these investments and will depend primarily on the financial condition of the borrower. Loans that are fully secured offer the Fund more protection than unsecured loans in the event of nonpayment of scheduled interest or principal, although there is no assurance that the liquidation of collateral from a secured loan would satisfy the corporate borrowers obligation, or that the collateral can be liquidated. Some loans or claims may be in default at the time of purchase. Certain of the loans and the other direct indebtedness acquired by the Fund may involve revolving credit facilities or other standby financing commitments that obligate the Fund to pay additional cash on a certain date or on demand. These commitments may require the Fund to increase its investment in a company at a time when the Fund might not otherwise decide to do so (including at a time when the companys financial condition makes it unlikely that such amounts will be repaid). To the extent that the Fund is committed to advance additional funds, it will at all times hold and maintain cash or other high-grade debt obligations in an amount sufficient to meet such commitments. When a loan agreement is purchased the Fund may pay an assignment fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a loan agreement. Prepayment penalty fees are received upon the prepayment of a loan agreement by the borrower. Prepayment penalty, facility, commitment, consent and amendment fees are recorded to income as earned or paid.
As the Fund may be required to rely upon another lending institution to collect and pass on to the Fund amounts payable with respect to the loan and to enforce the Funds rights under the loan and other direct indebtedness, an insolvency, bankruptcy, or reorganization of the lending institution may delay or prevent the Fund from receiving such amounts. The highly leveraged nature of many loans may make them especially vulnerable to adverse changes in economic or market conditions. Investments in such loans and other direct indebtedness may involve additional risk to the Fund.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Board has delegated to DMC 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. Rule 144A and restricted securities held by the Fund have been identified on the Schedule of investments.
63
Notes to financial statements | ||
Delaware Wealth Builder Fund |
10. 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.
11. General Motors Term Loan Litigation
The Fund received notice of a litigation proceeding related to a General Motors Corporation (G.M.) term loan participation previously held by the Fund in 2009. Because it was believed that the Fund was a secured creditor, the Fund received the full principal on the loans in 2009 after the G.M. bankruptcy. However, based upon a US Court of Appeals ruling the Motors Liquidation Company Avoidance Action Trust sought to recover such amounts arguing that, the Fund was an unsecured creditor and, as an unsecured creditor, the Fund should not have received payment in full. Based on available information related to the litigation and the Funds potential exposure, the Fund previously recorded a contingent liability of $901,538 and an asset of $270,461 based on the potential recoveries by the estate that resulted in a net decrease in the Funds NAV to reflect this potential recovery.
The plaintiff and the term loan lenders, which included the Fund, reached an agreement that resolved the disputes. The parties agreed to terms of a settlement agreement and presented the settlement agreement to the court for approval at a hearing on June 12, 2019. The court approved the settlement documentation and dismissed the case on July 2, 2019. The courts approval of the settlement and dismissal of the case with prejudice became final on July 16, 2019.
The contingent liability and other asset were removed in connection with the case being settled, which resulted in the Fund recognizing a gain in the amount of the liability reversed.
12. Recent Accounting Pronouncements
In March 2017, the FASB issued an Accounting Standards Update (ASU), ASU 2017-08, Receivables Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities which amends the amortization period for certain callable debt securities purchased at a premium, shortening such period to the earliest call date. ASU 2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018. Management has implemented ASU 2017-08 and determined that the impact of this guidance to the Funds net assets at the end of the period is not material.
In August 2018, the FASB issued an Accounting Standards Update (ASU), ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, Management is evaluating the implications of these changes on the financial statements.
64
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in ASU 2020-04 provides optional temporary financial reporting relief from the effect of certain types of contract modifications due to the planned discontinuation of LIBOR and other interbank-offered based reference rates as of the end of 2021. The ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period March 12, 2020 through Dec. 31, 2022. Management is currently evaluating the impact, if any, of applying this ASU.
13. Subsequent Events
Beginning in January 2020, global financial markets have experienced and may continue to experience significant volatility resulting from the spread of a novel coronavirus known as COVID-19. The outbreak of COVID-19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty. The effects of COVID-19 have and may continue to adversely affect the global economy, the economies of certain nations and individual issuers, all of which may negatively impact the Funds performance.
Management has determined that no other material events or transactions occurred subsequent to May 31, 2020, that would require recognition or disclosure in the Funds financial statements.
65
Other Fund information (Unaudited)
Delaware Wealth Builder Fund
Liquidity Risk Management Program
The Securities and Exchange Commission (the SEC) has adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule), which requires all open-end funds (other than money market funds) to adopt and implement a program reasonably designed to assess and manage the funds liquidity risk, defined as the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors interests in the fund.
The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the Program). The Board has designated the Division Director of the US Operational Risk Group of Macquarie Asset Management as the Program Administrator for each Fund in the Trust.
As required by the Liquidity Rule, the Program includes policies and procedures that provide for: (1) assessment, management, and review (no less frequently than annually) of the Funds liquidity risk; (2) classification of each of the Funds portfolio holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid); (3) for funds that do not primarily hold assets that are Highly Liquid, establishing and maintaining a minimum percentage of the Funds net assets in Highly Liquid investments (called a Highly Liquid Investment Minimum or HLIM); and (4) prohibiting the Funds acquisition of Illiquid investments if, immediately after the acquisition, the Fund would hold more than 15% of its net assets in Illiquid assets. The Program also requires reporting to the SEC (on a non-public basis) and to the Board if the Funds holdings of Illiquid assets exceed 15% of the Funds net assets. Funds with HLIMs must have procedures for addressing HLIM shortfalls, including reporting to the Board and, with respect to HLIM shortfalls lasting more than seven consecutive calendar days, reporting to the SEC (on a non-public basis).
In assessing and managing the Funds liquidity risk, the Program Administrator considers, as relevant, a variety of factors, including: (1) the Funds investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Funds holdings of cash and cash equivalents and any borrowing arrangements. Classification of the Funds portfolio holdings in the four liquidity categories is based on the number of days it is reasonably expected to take to convert the investment to cash (for Highly Liquid and Moderately Liquid holdings) or to sell or dispose of the investment (for Less Liquid and Illiquid investments), in current market conditions without significantly changing the investments market value. The Fund primarily holds assets that are classified as Highly Liquid, and therefore is not required to establish an HLIM.
At a meeting of the Board held on May 19-21, 2020, the Program Administrator provided a written report to the Board addressing the Programs operation and assessing the adequacy and effectiveness of its implementation for the period from December 1, 2018 through March 31, 2020. The report concluded that the Program is appropriately designed and effectively implemented and that it meets the requirements of Rule 22e-4 and the Funds liquidity needs. The Funds HLIM is set at an appropriate level and the Fund complied with its HLIM at all times during the reporting period.
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Board of trustees
Shawn K. Lytle President and Chief Executive Officer Delaware Funds ® by Macquarie Philadelphia, PA
Thomas L. Bennett Chairman of the Board Delaware Funds by Macquarie Private Investor Rosemont, PA
Jerome D. Abernathy Managing Member Stonebrook Capital Management, LLC Jersey City, NJ |
Ann D. Borowiec Former Chief Executive Officer Private Wealth Management J.P. Morgan Chase & Co. New York, NY
Joseph W. Chow Former Executive Vice President State Street Corporation Boston, MA
John A. Fry President Drexel University Philadelphia, PA |
Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. New York, NY
Frances A. Sevilla-Sacasa Former Chief Executive Officer Banco Itaú International Miami, FL |
Thomas K. Whitford Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Christianna Wood Chief Executive Officer and President Gore Creek Capital, Ltd. Golden, CO
Janet L. Yeomans Former Vice President and Treasurer 3M Company St. Paul, MN |
Affiliated officers
David F. Connor | Daniel V. Geatens | Richard Salus | ||||
Senior Vice President, | Vice President and | Senior Vice President and | ||||
General Counsel, | Treasurer | Chief Financial Officer | ||||
and Secretary | Delaware Funds | Delaware Funds | ||||
Delaware Funds | by Macquarie | by Macquarie | ||||
by Macquarie | Philadelphia, PA | Philadelphia, PA | ||||
Philadelphia, PA |
This semiannual report is for the information of Delaware Wealth Builder Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT. The Funds Forms N-PORT, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities, are available without charge (i) upon request, by calling 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 Schedule of Investments included in the Funds most recent Form N-PORT are available without charge on the Funds website at delawarefunds.com/literature. The Funds Forms N-PORT 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 delawarefunds.com/proxy; and (ii) on the SECs website at sec.gov.
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Delaware Funds® by Macquarie privacy practices notice
We are committed to protecting the privacy of our potential, current, and former customers. To provide the products and services you request, we must collect personal information about you. We do not sell your personal information to third parties. We collect your personal information and share it with third parties as necessary to provide you with the products or services you request and to administer your business with us. This notice describes our current privacy practices. While your relationship with us continues, we will update and send our privacy practices notice as required by law. We are committed to continuing to protect your personal information even after that relationship ends. You do not need to take any action because of this notice.
This page is not part of the semiannual report. i
Delaware Funds® by Macquarie privacy practices notice |
ii This page is not part of the semiannual report.
Macquarie Real Estate Absolute Return Partners, Inc.
Macquarie Total Return Fund Inc.
Optimum Fund Trust
Retirement Financial Services, Inc.
Revised February 2020
This page is not part of the semiannual report. iii
Delaware Funds® by Macquarie
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1On April 6, 2019, Foresters Investment Management Company, Inc. (FIMCO), the investment adviser to the First Investors Funds, entered into an agreement with Macquarie Management Holdings, Inc. (MMHI), a leading global investment management company, whereby MMHI, on behalf of its affiliate Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust (Macquarie), would acquire FIMCOs asset management business (the Transaction). In connection with the Transaction, the Board of Trustees of the First Investors Trusts approved, pursuant to an Agreement and Plan of Reorganization (the Agreement), the transfer of all assets and liabilities of each First Investors Fund to a corresponding, newly formed fund (each, an Acquiring Fund, and collectively, the Acquiring Funds) in the Delaware Funds® by Macquarie family of funds (each, a Reorganization and together, the Reorganizations). Following the requisite approval of each Reorganization from shareholders of each First Investors Fund, each Acquiring Fund is managed by DMC and each Acquiring Fund has the same or substantially the same investment objective and the same or similar principal investment strategies and principal risks as the corresponding First Investors Fund. The Transaction closed on Oct. 4, 2019 (the Closing Date). Information, including without limitation historical holdings and performance information, relating to the Acquiring Funds for periods prior to the Closing Date has been provided by FIMCO and is attributable to the Acquired Funds.
Carefully consider a Funds investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in each Funds prospectus and, if available, its summary prospectus. A Delaware Funds by Macquarie prospectus may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing.
Investing involves risk, including the possible loss of principal.
The Funds are distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
iv This page is not part of the semiannual report.
2Closed to certain new investors.
3On June 10, 2020, the Board of Trustees approved a proposal to liquidate and dissolve Delaware Global Real Estate Opportunities Fund (Fund) and to appoint a new portfolio manager. The liquidation and dissolution are expected to take effect on or about Aug. 13, 2020. The Fund closed to new investors on June 19, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until five (5) days before the liquidation date. Until the liquidation, shareholders of the Fund will have the opportunity to exchange their shares for shares of the same class of any other Delaware Funds by Macquarie fund. If a shareholder does not opt to exchange his or her shares prior to the liquidation, the shareholder will be paid a liquidating distribution by the Fund.
4Effective Aug. 20, 2019, the Funds name, investment objectives, and portfolio managers changed. The new portfolio managers intend to reposition the Funds investment portfolio in accordance with its current investment process. Because everyones tax situation is unique, you should consult your tax professional about federal, state, local, or foreign tax consequences before making an investment in the Fund.
5On May 20, 2020, the Board of Trustees unanimously voted and approved a proposal to liquidate and dissolve Delaware Government Cash Management Fund (Fund). The liquidation and dissolution are expected to take effect on or about Sept. 25, 2020. The Fund closed to new investors and all sales efforts ceased as of the close of business on Thursday, July 2, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until close of business Wednesday, Sept. 23, 2020. Until the liquidation, shareholders of the Fund will have the opportunity to exchange their shares for shares of the same class of any other Delaware Funds by Macquarie fund. Any exchange would be made at the current net asset value of the Fund and the selected Delaware Fund. The Funds shareholders would not incur front-end or contingent deferred sales charges upon these exchanges as the funds do not typically carry loads or sales charges.
This page is not part of the semiannual report. v
Caring for your portfolio
Over a lifetime, things change. When they do, its important to ensure that your investments stay in tune with your personal situation.
vi This page is not part of the semiannual report.
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Contact information
Shareholder assistance by phone
800 523-1918, weekdays from 8:30am to
6:00pm Eastern time
For securities dealers and financial
institutions representatives only
800 362-7500
Regular mail
P.O. Box 9876
Providence, RI 02940-8076
Overnight courier service
4400 Computer Drive
Westborough, MA 01581-1722
Macquarie Investment Management 2005 Market Street Philadelphia, PA 19103-7094
Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, Macquarie Capital Investment Management LLC, and Macquarie Investment Management Europe S.A.
The Fund is distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
Other than MBL, none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations.
(1228303) | ||||
x |
This page is not part of the semiannual report. | SA-129 22617 [7/20] |
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Semiannual report
US equity mutual fund
Delaware Small Cap Core Fund
May 31, 2020
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Funds shareholder reports will no longer be sent to you by mail, unless you specifically request them from the Fund or from your financial intermediary, such as a broker/dealer, bank, or insurance company. Instead, you will be notified by mail each time a report is posted on the website and provided with a link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you do not need to take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by signing up at delawarefunds.com/edelivery. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive paper copies of all future shareholder reports free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting us at 800 523-1918. If you own these shares through a financial intermediary, you may contact your financial intermediary to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the Delaware Funds® by Macquarie or your financial intermediary.
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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 delawarefunds.com/literature 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 delawarefunds.com/edelivery.
Experience Delaware Funds® by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices in the United States, Europe, Asia, and Australia. As active managers, we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Small Cap Core Fund at delawarefunds.com/literature.
For the six-month period from December 1, 2019 to May 31, 2020 (Unaudited)
The investment objective of the Fund is to seek long-term capital appreciation.
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Dec. 1, 2019 to May 31, 2020.
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 assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
For the six-month period from December 1, 2019 to May 31, 2020 (Unaudited)
Delaware Small Cap Core Fund
Expense analysis of an investment of $1,000
Beginning Account Value 12/1/19 |
Ending Account Value 5/31/20 |
Annualized Expense Ratio |
Expenses Paid During Period 12/1/19 to 5/31/20* |
|||||||||||||
|
||||||||||||||||
Actual Fund return |
||||||||||||||||
Class A |
$1,000.00 | $875.60 | 1.09% | $5.11 | ||||||||||||
Class C |
1,000.00 | 872.20 | 1.84% | 8.61 | ||||||||||||
Class R |
1,000.00 | 874.60 | 1.34% | 6.28 | ||||||||||||
Institutional Class |
1,000.00 | 877.10 | 0.84% | 3.94 | ||||||||||||
Class R6
|
1,000.00 | 877.50 | 0.71% | 3.33 | ||||||||||||
Hypothetical 5% return (5% return before expenses) |
|
|||||||||||||||
Class A |
$1,000.00 | $1,019.55 | 1.09% | $5.50 | ||||||||||||
Class C |
1,000.00 | 1,015.80 | 1.84% | 9.27 | ||||||||||||
Class R |
1,000.00 | 1,018.30 | 1.34% | 6.76 | ||||||||||||
Institutional Class |
1,000.00 | 1,020.80 | 0.84% | 4.24 | ||||||||||||
Class R6
|
1,000.00 | 1,021.45 | 0.71% | 3.59 |
*Expenses Paid During Period are equal to the Funds annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (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.
In addition to the Funds expenses reflected above, the Fund also indirectly bears its portion of the fees and expenses of the investment companies (Underlying Funds) in which it invests. The table above does not reflect the expenses of the Underlying Funds.
2
Security type / sector allocation and top 10
equity holdings
Delaware Small Cap Core Fund | As of May 31, 2020 (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.
Security type / sector | Percentage of net assets | ||||
Common Stock |
97.95 | % | |||
Basic Materials |
8.07 | % | |||
Business Services |
4.81 | % | |||
Capital Goods |
10.26 | % | |||
Communications Services |
0.57 | % | |||
Consumer Discretionary |
3.11 | % | |||
Consumer Services |
1.95 | % | |||
Consumer Staples |
2.04 | % | |||
Credit Cyclicals |
1.89 | % | |||
Energy |
0.21 | % | |||
Financials |
15.01 | % | |||
Healthcare |
20.59 | % | |||
Information Technology |
15.84 | % | |||
Media |
0.37 | % | |||
Real Estate Investment Trusts |
6.67 | % | |||
Transportation |
1.49 | % | |||
Utilities |
5.07 | % | |||
Short-Term Investments |
2.46 | % | |||
Total Value of Securities |
100.41 | % | |||
Liabilities Net of Receivables and Other Assets |
(0.41 | %) | |||
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 | ||||
Repligen |
1.81 | % | |||
Quidel |
1.63 | % | |||
Natera |
1.61 | % | |||
South Jersey Industries |
1.56 | % | |||
Ultragenyx Pharmaceutical |
1.53 | % | |||
Spire |
1.51 | % | |||
Teladoc Health |
1.48 | % | |||
Boise Cascade |
1.41 | % | |||
J2 Global |
1.34 | % | |||
Merit Medical Systems
|
|
1.32
|
%
|
3
Schedule of investments | ||
Delaware Small Cap Core Fund | May 31, 2020 (Unaudited) |
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock 97.95% |
||||||||
|
||||||||
Basic Materials 8.07% |
||||||||
Balchem |
407,474 | $ | 41,012,258 | |||||
Boise Cascade |
1,953,570 | 66,479,987 | ||||||
Coeur Mining |
2,596,225 | 14,928,294 | ||||||
Ferro |
1,933,781 | 23,244,048 | ||||||
Kaiser Aluminum |
634,978 | 45,559,671 | ||||||
Minerals Technologies |
1,192,497 | 58,802,027 | ||||||
Neenah |
959,615 | 48,518,134 | ||||||
Quaker Chemical |
262,442 | 44,838,216 | ||||||
Worthington Industries |
1,222,198 | 36,568,164 | ||||||
|
|
|||||||
379,950,799 | ||||||||
|
|
|||||||
Business Services 4.81% |
||||||||
ABM Industries |
1,364,086 | 41,918,363 | ||||||
ASGN |
844,688 | 52,024,334 | ||||||
BrightView Holdings |
2,058,889 | 28,186,190 | ||||||
Casella Waste Systems Class A |
694,895 | 35,404,900 | ||||||
Mobile Mini |
1,152,454 | 36,924,626 | ||||||
US Ecology |
956,637 | 32,209,968 | ||||||
|
|
|||||||
226,668,381 | ||||||||
|
|
|||||||
Capital Goods 10.26% |
||||||||
Applied Industrial Technologies |
930,572 | 53,973,176 | ||||||
Barnes Group |
607,419 | 22,948,290 | ||||||
Belden |
885,305 | 30,135,782 | ||||||
Columbus McKinnon |
1,293,428 | 39,333,145 | ||||||
ESCO Technologies |
427,172 | 35,288,679 | ||||||
Federal Signal |
1,917,776 | 55,883,993 | ||||||
Kadant |
443,643 | 42,957,952 | ||||||
KBR |
1,183,521 | 27,753,567 | ||||||
MasTec |
883,690 | 34,596,463 | ||||||
MYR Group |
1,265,705 | 36,464,961 | ||||||
Rexnord |
1,579,177 | 47,533,228 | ||||||
Tetra Tech |
716,182 | 56,506,760 | ||||||
|
|
|||||||
483,375,996 | ||||||||
|
|
|||||||
Communications Services 0.57% |
||||||||
ATN International |
453,317 | 26,927,030 | ||||||
|
|
|||||||
26,927,030 | ||||||||
|
|
|||||||
Consumer Discretionary 3.11% |
||||||||
American Eagle Outfitters |
1,786,808 | 16,367,161 | ||||||
BJs Wholesale Club Holdings |
968,881 | 34,879,716 | ||||||
Five Below |
155,910 | 16,315,981 |
4
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock (continued) |
| |||||||
Consumer Discretionary (continued) |
||||||||
Malibu Boats Class A |
736,341 | $ | 34,703,751 | |||||
Steven Madden |
1,885,372 | 44,343,949 | ||||||
|
|
|||||||
146,610,558 | ||||||||
|
|
|||||||
Consumer Services 1.95% |
||||||||
Chuys Holdings |
558,832 | 8,935,724 | ||||||
Jack in the Box |
290,716 | 19,483,786 | ||||||
Texas Roadhouse |
454,781 | 23,580,395 | ||||||
Wendys |
1,866,530 | 39,682,428 | ||||||
|
|
|||||||
91,682,333 | ||||||||
|
|
|||||||
Consumer Staples 2.04% |
||||||||
J&J Snack Foods |
290,983 | 37,429,143 | ||||||
Prestige Consumer Healthcare |
1,384,433 | 58,423,073 | ||||||
|
|
|||||||
95,852,216 | ||||||||
|
|
|||||||
Credit Cyclicals 1.89% |
||||||||
Dana |
370,020 | 4,677,053 | ||||||
KB Home |
1,241,216 | 41,059,425 | ||||||
Taylor Morrison Home |
2,011,331 | 38,879,028 | ||||||
Tenneco Class A |
630,171 | 4,259,956 | ||||||
|
|
|||||||
88,875,462 | ||||||||
|
|
|||||||
Energy 0.21% |
||||||||
Patterson-UTI Energy |
202,724 | 748,052 | ||||||
PDC Energy |
748,304 | 9,114,343 | ||||||
|
|
|||||||
9,862,395 | ||||||||
|
|
|||||||
Financials 15.01% |
||||||||
American Equity Investment Life Holding |
1,480,565 | 32,113,455 | ||||||
Bryn Mawr Bank |
640,603 | 17,789,545 | ||||||
CenterState Bank |
2,162,873 | 34,173,393 | ||||||
City Holding |
449,772 | 28,290,659 | ||||||
Essent Group |
1,311,323 | 43,339,225 | ||||||
First Bancorp |
1,009,935 | 25,672,548 | ||||||
First Financial Bancorp |
1,931,992 | 25,676,174 | ||||||
First Interstate BancSystem Class A |
1,078,259 | 33,695,594 | ||||||
Great Western Bancorp |
985,280 | 14,030,387 | ||||||
Hamilton Lane Class A |
513,535 | 37,575,356 | ||||||
Independent Bank |
594,988 | 41,333,816 | ||||||
Independent Bank Group |
674,030 | 25,532,256 | ||||||
Kemper |
257,406 | 16,319,540 | ||||||
NMI Holdings Class A |
888,758 | 13,655,767 | ||||||
Old National Bancorp |
2,786,999 | 37,875,316 | ||||||
Pacific Premier Bancorp |
828,456 | 17,911,219 | ||||||
Primerica |
119,341 | 13,561,911 |
5
Schedules of investments
Delaware Small Cap Core Fund
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock (continued) |
| |||||||
Financials (continued) |
||||||||
RLI |
280,388 | $ | 22,139,436 | |||||
Selective Insurance Group |
768,263 | 40,295,394 | ||||||
Stifel Financial |
932,376 | 44,483,659 | ||||||
Umpqua Holdings |
2,326,888 | 26,503,254 | ||||||
United Community Banks |
1,486,455 | 29,060,195 | ||||||
Valley National Bancorp |
3,858,736 | 30,792,713 | ||||||
WesBanco |
1,281,111 | 27,441,398 | ||||||
WSFS Financial |
1,001,838 | 27,720,857 | ||||||
|
|
|||||||
706,983,067 | ||||||||
|
|
|||||||
Healthcare 20.59% |
||||||||
Adamas Pharmaceuticals |
190,712 | 526,365 | ||||||
Agios Pharmaceuticals |
858,221 | 44,404,355 | ||||||
ChemoCentryx |
347,756 | 21,696,497 | ||||||
CONMED |
579,463 | 42,538,379 | ||||||
CryoLife |
1,497,292 | 34,033,447 | ||||||
Intercept Pharmaceuticals |
532,618 | 38,486,977 | ||||||
Ligand Pharmaceuticals |
543,805 | 55,234,274 | ||||||
Merit Medical Systems |
1,384,036 | 62,267,780 | ||||||
Natera |
1,731,230 | 75,914,436 | ||||||
NuVasive |
814,732 | 49,372,759 | ||||||
PTC Therapeutics |
672,842 | 34,119,818 | ||||||
Quidel |
439,694 | 76,946,450 | ||||||
Repligen |
652,569 | 85,466,962 | ||||||
Retrophin |
2,743,460 | 43,031,170 | ||||||
Shockwave Medical |
287,411 | 12,648,958 | ||||||
Spectrum Pharmaceuticals |
2,523,786 | 7,419,931 | ||||||
Supernus Pharmaceuticals |
1,364,868 | 32,920,616 | ||||||
Tabula Rasa HealthCare |
919,848 | 49,147,479 | ||||||
Teladoc Health |
400,545 | 69,718,863 | ||||||
Ultragenyx Pharmaceutical |
1,050,975 | 71,949,749 | ||||||
Vanda Pharmaceuticals |
2,580,920 | 30,248,382 | ||||||
Wright Medical Group |
1,073,184 | 31,712,587 | ||||||
|
|
|||||||
969,806,234 | ||||||||
|
|
|||||||
Information Technology 15.84% |
||||||||
Anixter International |
200,287 | 19,169,469 | ||||||
Bandwidth Class A |
152,296 | 16,882,012 | ||||||
Blackbaud |
289,381 | 16,960,620 | ||||||
Box Class A |
745,199 | 14,889,076 | ||||||
Brooks Automation |
1,220,269 | 48,774,152 | ||||||
Chegg |
740,632 | 45,237,803 | ||||||
ExlService Holdings |
802,147 | 49,067,332 |
6
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock (continued) |
| |||||||
Information Technology (continued) |
||||||||
II-VI |
1,101,200 | $ | 52,340,036 | |||||
J2 Global |
803,115 | 62,883,905 | ||||||
LendingTree |
58,238 | 15,143,045 | ||||||
MACOM Technology Solutions Holdings |
304,457 | 9,666,510 | ||||||
MaxLinear |
2,019,446 | 34,976,805 | ||||||
Mimecast |
670,724 | 28,022,849 | ||||||
NETGEAR |
912,183 | 23,470,469 | ||||||
Paylocity Holding |
91,091 | 11,842,285 | ||||||
Plantronics |
363,324 | 4,734,112 | ||||||
Q2 Holdings |
745,971 | 61,632,124 | ||||||
Rapid7 |
1,267,376 | 61,962,013 | ||||||
Semtech |
1,133,269 | 60,267,245 | ||||||
Silicon Laboratories |
438,317 | 41,052,770 | ||||||
WNS Holdings ADR |
861,456 | 41,642,783 | ||||||
Yelp |
1,170,791 | 25,452,996 | ||||||
|
|
|||||||
746,070,411 | ||||||||
|
|
|||||||
Media 0.37% |
||||||||
Nexstar Media Group Class A |
208,059 | 17,333,395 | ||||||
|
|
|||||||
17,333,395 | ||||||||
|
|
|||||||
Real Estate Investment Trusts 6.67% |
||||||||
American Assets Trust |
967,035 | 25,307,306 | ||||||
Armada Hoffler Properties |
2,124,524 | 18,313,397 | ||||||
Cousins Properties |
542,777 | 16,891,220 | ||||||
EastGroup Properties |
429,570 | 49,937,513 | ||||||
First Industrial Realty Trust |
1,480,279 | 56,072,969 | ||||||
Kite Realty Group Trust |
1,979,900 | 19,205,030 | ||||||
Lexington Realty Trust |
3,060,100 | 29,744,172 | ||||||
Mack-Cali Realty |
840,280 | 12,780,659 | ||||||
National Storage Affiliates Trust |
150,168 | 4,506,542 | ||||||
Pebblebrook Hotel Trust |
1,277,078 | 17,444,885 | ||||||
Physicians Realty Trust |
2,789,492 | 48,174,527 | ||||||
RPT Realty |
2,697,100 | 15,562,267 | ||||||
|
|
|||||||
313,940,487 | ||||||||
|
|
|||||||
Transportation 1.49% |
||||||||
Hub Group Class A |
794,152 | 37,142,489 | ||||||
Werner Enterprises |
717,451 | 33,160,585 | ||||||
|
|
|||||||
70,303,074 | ||||||||
|
|
|||||||
Utilities 5.07% |
||||||||
Black Hills |
534,964 | 33,012,628 | ||||||
NorthWestern |
1,018,579 | 61,236,969 | ||||||
South Jersey Industries |
2,590,932 | 73,478,832 |
7
Schedules of investments
Delaware Small Cap Core Fund
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock (continued) |
| |||||||
Utilities (continued) |
||||||||
Spire |
976,772 | $ | 71,226,214 | |||||
|
|
|||||||
238,954,643 | ||||||||
|
|
|||||||
Total Common Stock (cost $4,690,898,851) |
4,613,196,481 | |||||||
|
|
|||||||
Short-Term Investments 2.46% |
||||||||
Money Market Mutual Funds 2.46% |
||||||||
BlackRock FedFund Institutional Shares (seven-day effective yield 0.11%) |
23,197,890 | 23,197,890 | ||||||
Fidelity Investments Money Market Government Portfolio Class I (seven-day effective yield 0.08%) |
23,197,890 | 23,197,890 | ||||||
GS Financial Square Government Fund Institutional Shares (seven-day effective yield 0.16%) |
23,197,890 | 23,197,890 | ||||||
Morgan Stanley Government Portfolio Institutional Share Class (seven-day effective yield 0.07%) |
23,197,890 | 23,197,890 | ||||||
State Street Institutional US Government Money Market Fund Investor Class (seven-day effective yield 0.05%) |
23,197,890 | 23,197,890 | ||||||
|
|
|||||||
Total Short-Term Investments (cost $115,989,450) |
115,989,450 | |||||||
|
|
|||||||
Total Value of Securities 100.41% |
$ | 4,729,185,931 | ||||||
|
|
| Non-income producing security. |
Summary of Abbreviations:
ADR American Depositary Receipt
GS Goldman Sachs
See accompanying notes, which are an integral part of the financial statements.
8
Statement of assets and liabilities
Delaware Small Cap Core Fund | May 31, 2020 (Unaudited) |
Assets: |
||||
Investments, at value1 |
$ 4,729,185,931 | |||
Receivable for fund shares sold |
15,251,443 | |||
Receivable for securities sold |
5,353,057 | |||
Dividends and interest receivable |
2,984,523 | |||
|
|
|||
Total assets |
4,752,774,954 | |||
|
|
|||
Liabilities: |
||||
Payable for securities purchased |
30,559,858 | |||
Payable for fund shares redeemed |
8,487,528 | |||
Investment management fees payable to affiliates |
2,408,603 | |||
Other accrued expenses |
1,135,016 | |||
Distribution fees payable to affiliates |
140,594 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates |
36,499 | |||
Trustees fees and expenses payable to affiliates |
16,102 | |||
Accounting and administration expenses payable to affiliates |
13,385 | |||
Legal fees payable to affiliates |
8,000 | |||
Total liabilities |
42,805,585 | |||
|
|
|||
Total Net Assets |
$ 4,709,969,369 | |||
|
|
|||
Net Assets Consist of: |
||||
Paid-in capital |
$ 5,024,413,941 | |||
Total distributable earnings (loss) |
(314,444,572 | ) | ||
|
|
|||
Total Net Assets |
$ 4,709,969,369 | |||
|
|
9
Statement of assets and liabilities
Delaware Small Cap Core Fund
Net Asset Value |
||||
Class A: |
||||
Net assets |
$ | 228,036,039 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
11,427,580 | |||
Net asset value per share |
$ | 19.95 | ||
Sales charge |
5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 sales charge) |
$ | 21.17 | ||
Class C: |
||||
Net assets |
$ | 105,200,101 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
6,037,647 | |||
Net asset value per share |
$ | 17.42 | ||
Class R: |
||||
Net assets |
$ | 22,642,691 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
1,179,491 | |||
Net asset value per share |
$ | 19.20 | ||
Institutional Class: |
||||
Net assets |
$ | 3,664,609,907 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
179,051,405 | |||
Net asset value per share |
$ | 20.47 | ||
Class R6: |
||||
Net assets |
$ | 689,480,631 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
33,654,746 | |||
Net asset value per share |
$ | 20.49 | ||
1 Investments, at cost |
$ | 4,806,888,301 |
See accompanying notes, which are an integral part of the financial statements.
10
Statement of operations | ||
Delaware Small Cap Core Fund | Six months ended May 31, 2020 (Unaudited) |
Investment Income: |
||||
Dividends |
$ | 25,256,681 | ||
Expenses: |
||||
Management fees |
14,706,982 | |||
Dividend disbursing and transfer agent fees and expenses |
2,921,823 | |||
Distribution expenses Class A |
303,753 | |||
Distribution expenses Class C |
591,868 | |||
Distribution expenses Class R |
59,919 | |||
Accounting and administration expenses |
369,420 | |||
Reports and statements to shareholders expenses |
234,878 | |||
Registration fees |
153,471 | |||
Legal fees |
119,138 | |||
Trustees fees and expenses |
118,471 | |||
Custodian fees |
68,074 | |||
Audit and tax fees |
17,994 | |||
Other |
56,808 | |||
|
|
|||
19,722,599 | ||||
Less expenses paid indirectly |
(12,074 | ) | ||
|
|
|||
Total operating expenses |
19,710,525 | |||
|
|
|||
Net Investment Income |
5,546,156 | |||
|
|
|||
Net Realized and Unrealized Loss: |
||||
Net realized loss on investments |
(204,514,094 | ) | ||
Net change in unrealized appreciation (depreciation) of investments |
(375,738,349 | ) | ||
|
|
|||
Net Realized and Unrealized Loss |
(580,252,443 | ) | ||
|
|
|||
Net Decrease in Net Assets Resulting from Operations |
$ | (574,706,287 | ) | |
|
|
See accompanying notes, which are an integral part of the financial statements.
11
Statements of changes in net assets
Delaware Small Cap Core Fund
Six months ended 5/31/20 (Unaudited) |
Year ended 11/30/19 |
|||||||
|
||||||||
Increase (Decrease) in Net Assets from Operations: |
||||||||
Net investment income |
$ | 5,546,156 | $ | 16,668,907 | ||||
Net realized gain (loss) |
(204,514,094 | ) | 59,919,437 | |||||
Net change in unrealized appreciation (depreciation) |
(375,738,349 | ) | 298,900,482 | |||||
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations |
(574,706,287 | ) | 375,488,826 | |||||
|
|
|
|
|||||
Dividends and Distributions to Shareholders from: |
||||||||
Distributable earnings: |
||||||||
Class A |
(5,024,974 | ) | (23,201,283 | ) | ||||
Class C |
(2,606,845 | ) | (15,155,451 | ) | ||||
Class R |
(469,815 | ) | (2,408,871 | ) | ||||
Institutional Class |
(78,648,542 | ) | (284,199,890 | ) | ||||
Class R6 |
(14,406,900 | ) | (35,356,232 | ) | ||||
|
|
|
|
|||||
(101,157,076 | ) | (360,321,727 | ) | |||||
|
|
|
|
|||||
Capital Share Transactions: |
||||||||
Proceeds from shares sold: |
||||||||
Class A |
38,299,417 | 75,268,971 | ||||||
Class C |
5,706,861 | 12,865,967 | ||||||
Class R |
2,508,331 | 5,369,377 | ||||||
Institutional Class |
940,820,700 | 1,456,229,567 | ||||||
Class R6 |
179,151,295 | 321,865,935 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
4,847,156 | 22,970,955 | ||||||
Class C |
2,578,578 | 15,002,741 | ||||||
Class R |
469,671 | 2,408,397 | ||||||
Institutional Class |
63,748,709 | 234,609,635 | ||||||
Class R6 |
10,060,122 | 33,313,487 | ||||||
|
|
|
|
|||||
1,248,190,840 | 2,179,905,032 | |||||||
|
|
|
|
12
Six months ended 5/31/20 (Unaudited) |
Year ended 11/30/19 |
|||||||
Capital Share Transactions (continued): |
||||||||
Cost of shares redeemed: |
||||||||
Class A |
$ | (55,618,638 | ) | $ | (103,447,595 | ) | ||
Class C |
(21,995,602 | ) | (49,231,885 | ) | ||||
Class R |
(4,033,521 | ) | (7,898,063 | ) | ||||
Institutional Class |
(712,889,569 | ) | (1,255,551,504 | ) | ||||
Class R6 |
(81,049,923 | ) | (115,555,694 | ) | ||||
|
|
|
|
|||||
(875,587,253 | ) | (1,531,684,741 | ) | |||||
|
|
|
|
|||||
Increase in net assets derived from capital share transactions |
372,603,587 | 648,220,291 | ||||||
|
|
|
|
|||||
Net Increase (Decrease) in Net Assets |
(303,259,776 | ) | 663,387,390 | |||||
Net Assets: |
||||||||
Beginning of period |
5,013,229,145 | 4,349,841,755 | ||||||
|
|
|
|
|||||
End of period |
$ | 4,709,969,369 | $ | 5,013,229,145 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
13
Delaware Small Cap Core Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income (loss)2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period. |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets5 |
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 | The amount is less than $0.005 per share. |
4 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. |
5 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
14
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 23.20 | $ | 23.91 | $ | 25.74 | $ | 22.23 | $ | 20.32 | $ | 20.43 | |||||||||||||||
| 3 | 0.03 | 0.05 | (0.03 | ) | (0.02 | ) | (0.04 | ) | |||||||||||||||||
(2.83 | ) | 1.25 | 0.04 | 3.78 | 2.52 | 1.01 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.83 | ) | 1.28 | 0.09 | 3.75 | 2.50 | 0.97 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.04 | ) | (0.02 | ) | | | | | |||||||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.42 | ) | (1.99 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 19.95 | $ | 23.20 | $ | 23.91 | $ | 25.74 | $ | 22.23 | $ | 20.32 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(12.44% | ) | 7.79% | 0.44% | 17.02% | 12.86% | 4.86% | ||||||||||||||||||||
$ | 228,036 | $ | 279,872 | $ | 288,721 | $ | 324,710 | $ | 358,054 | $ | 266,427 | |||||||||||||||
1.09% | 1.10% | 1.12% | 1.18% | 1.24% | 1.28% | |||||||||||||||||||||
0.02% | 0.15% | 0.19% | (0.12% | ) | (0.09% | ) | (0.22% | ) | ||||||||||||||||||
18% | 34% | 38% | 54% | 43% | 38% | |||||||||||||||||||||
|
|
15
Financial highlights
Delaware Small Cap Core Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment loss2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets4 |
Ratio of net investment loss to average net assets. |
Portfolio turnover |
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
16
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 20.35 | $ | 21.38 | $ | 23.38 | $ | 20.36 | $ | 18.80 | $ | 19.11 | |||||||||||||||
(0.07 | ) | (0.11 | ) | (0.13 | ) | (0.19 | ) | (0.15 | ) | (0.18 | ) | |||||||||||||||
(2.48 | ) | 1.05 | 0.05 | 3.45 | 2.30 | 0.95 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.55 | ) | 0.94 | (0.08 | ) | 3.26 | 2.15 | 0.77 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 17.42 | $ | 20.35 | $ | 21.38 | $ | 23.38 | $ | 20.36 | $ | 18.80 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(12.78% | ) | 6.99% | (0.31% | ) | 16.17% | 12.01% | 4.11% | |||||||||||||||||||
$ | 105,200 | $ | 139,808 | $ | 168,400 | $ | 154,837 | $ | 126,787 | $ | 99,019 | |||||||||||||||
1.84% | 1.85% | 1.87% | 1.93% | 1.99% | 2.03% | |||||||||||||||||||||
(0.73% | ) | (0.60% | ) | (0.56% | ) | (0.87% | ) | (0.84% | ) | (0.97% | ) | |||||||||||||||
18% | 34% | 38% | 54% | 43% | 38% | |||||||||||||||||||||
|
|
17
Financial highlights
Delaware Small Cap Core Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment loss2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period. |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets4 |
Ratio of net investment loss to average net assets. |
Portfolio turnover |
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
18
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 22.33 | $ | 23.12 | $ | 25.01 | $ | 21.66 | $ | 19.86 | $ | 20.04 | |||||||||||||||
(0.02 | ) | (0.02 | ) | (0.02 | ) | (0.08 | ) | (0.06 | ) | (0.09 | ) | |||||||||||||||
(2.73 | ) | 1.20 | 0.05 | 3.67 | 2.45 | 0.99 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.75 | ) | 1.18 | 0.03 | 3.59 | 2.39 | 0.90 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 19.20 | $ | 22.33 | $ | 23.12 | $ | 25.01 | $ | 21.66 | $ | 19.86 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(12.54% | ) | 7.55% | 0.19% | 16.73% | 12.60% | 4.60% | ||||||||||||||||||||
$ | 22,643 | $ | 27,631 | $ | 28,138 | $ | 33,112 | $ | 31,416 | $ | 28,178 | |||||||||||||||
1.34% | 1.35% | 1.37% | 1.43% | 1.49% | 1.53% | |||||||||||||||||||||
(0.23% | ) | (0.10% | ) | (0.06% | ) | (0.37% | ) | (0.34% | ) | (0.47% | ) | |||||||||||||||
18% | 34% | 38% | 54% | 43% | 38% | |||||||||||||||||||||
|
|
19
Financial highlights
Delaware Small Cap Core Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
|
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income2 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period. |
Total return3 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets4 |
Ratio of net investment income to average net assets |
Portfolio turnover |
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
20
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||
|
||||||||||||||||||||||||
$ | 23.81 | $ | 24.50 | $ | 26.29 | $ | 22.66 | $ | 20.65 | $ | 20.69 | |||||||||||||
0.03 | 0.09 | 0.11 | 0.03 | 0.03 | 0.01 | |||||||||||||||||||
(2.89 | ) | 1.28 | 0.05 | 3.86 | 2.57 | 1.03 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(2.86 | ) | 1.37 | 0.16 | 3.89 | 2.60 | 1.04 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(0.10 | ) | (0.09 | ) | (0.03 | ) | (0.02 | ) | | | |||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(0.48 | ) | (2.06 | ) | (1.95 | ) | (0.26 | ) | (0.59 | ) | (1.08 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | 20.47 | $ | 23.81 | $ | 24.50 | $ | 26.29 | $ | 22.66 | $ | 20.65 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(12.29% | ) | 8.06% | 0.69% | 17.31% | 13.15% | 5.15% | ||||||||||||||||||
$ | 3,664,610 | $ | 3,888,603 | $ | 3,451,251 | $ | 2,275,563 | $ | 1,271,533 | $ | 620,220 | |||||||||||||
0.84% | 0.85% | 0.87% | 0.93% | 0.99% | 1.03% | |||||||||||||||||||
0.27% | 0.40% | 0.44% | 0.13% | 0.16% | 0.03% | |||||||||||||||||||
18% | 34% | 38% | 54% | 43% | 38% | |||||||||||||||||||
|
21
Financial highlights
Delaware Small Cap Core Fund Class R6
Selected data for each share of the Fund outstanding throughout each period were as follows:
|
Net asset value, beginning of period |
Income (loss) from investment operations: |
Net investment income3 |
Net realized and unrealized gain (loss) |
Total from investment operations |
Less dividends and distributions from: |
Net investment income |
Net realized gain |
Total dividends and distributions |
Net asset value, end of period |
Total return4 |
Ratios and supplemental data: |
Net assets, end of period (000 omitted) |
Ratio of expenses to average net assets5 |
Ratio of net investment income to average net assets |
Portfolio turnover |
|
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 | The average shares outstanding method has been applied for per share information. |
4 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
5 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
6 | Portfolio turnover is representative of the Fund for the entire year ended Nov. 30, 2016. |
See accompanying notes, which are an integral part of the financial statements.
22
Six months ended 5/31/201 (Unaudited) |
Year ended | 5/2/162 to 11/30/16 |
||||||||||||||||||||
11/30/19 | 11/30/18 | 11/30/17 | ||||||||||||||||||||
|
|
|||||||||||||||||||||
$ | 23.85 | $ | 24.54 | $ | 26.32 | $ | 22.68 | $ | 19.09 | |||||||||||||
0.04 | 0.12 | 0.15 | 0.06 | 0.03 | ||||||||||||||||||
(2.90 | ) | 1.28 | 0.05 | 3.86 | 3.56 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(2.86 | ) | 1.40 | 0.20 | 3.92 | 3.59 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(0.12 | ) | (0.12 | ) | (0.06 | ) | (0.04 | ) | | ||||||||||||||
(0.38 | ) | (1.97 | ) | (1.92 | ) | (0.24 | ) | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(0.50 | ) | (2.09 | ) | (1.98 | ) | (0.28 | ) | | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | 20.49 | $ | 23.85 | $ | 24.54 | $ | 26.32 | $ | 22.68 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(12.25% | ) | 8.20% | 0.86% | 17.45% | 18.81% | |||||||||||||||||
$ | 689,480 | $ | 677,315 | $ | 413,332 | $ | 49,594 | $ | 2 | |||||||||||||
0.71% | 0.72% | 0.74% | 0.79% | 0.82% | ||||||||||||||||||
0.40% | 0.53% | 0.57% | 0.27% | 0.29% | ||||||||||||||||||
18% | 34% | 38% | 54% | 43% | 6 | |||||||||||||||||
|
|
23
Notes to financial statements | ||
Delaware Small Cap Core Fund |
May 31, 2020 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Wealth Builder Fund, Delaware Small Cap Core Fund, and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Small Cap Core Fund (Fund). The Fund is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R, Institutional Class, and Class R6 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) instead of a front-end sales charge of 1.00%, if redeemed during the first year, and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, which will be incurred if redeemed during the first 12 months. Class R, Institutional Class, and Class R6 shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Class R6 shares do not pay any service fees, sub-accounting fees, and/or sub-transfer agency fees to any brokers, dealers, or other financial intermediaries.
1. Significant Accounting Policies
The Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services Investment Companies. The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Fund.
Security Valuation Equity securities, except those traded on the Nasdaq Stock Market LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If, on a particular day, an equity security does not trade, the mean between the bid and ask prices will be used, which approximates fair value. Open-end investment companies are valued at their published net asset value (NAV). US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. 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 Trusts Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Board.
Federal Income Taxes No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the 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 or expected to be taken on the Funds federal income tax returns through the six months ended May 31, 2020 and for all open tax years
24
(years ended Nov. 30, 2017Nov. 30, 2019), and has concluded that no provision for federal income tax is required in the Funds financial statements. If applicable, the Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in Other on the Statement of operations. During the six months ended May 31, 2020, the Fund did not incur any interest or tax penalties.
Class Accounting Investment income, common expenses, and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Class R6 shares are not allocated any expenses related to service fees, sub-accounting fees, and/or sub-transfer agency fees paid to brokers, dealers, or financial intermediaries.
Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Distributions received from investments in real estate investment trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement are included on the Statement of operations under Custodian fees with the corresponding expenses offset included under Less expenses paid indirectly. For the six months ended May 31, 2020, the Fund earned $11,076 under this arrangement.
The Fund receives earnings credits from its transfer agent when positive cash balances are maintained, which may be used to offset transfer agent fees. If the amount earned is greater than $1, the expenses paid under this arrangement are included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses with the corresponding expenses offset included under Less expenses paid indirectly. For the six months ended May 31, 2020, the Fund earned $998 under this arrangement.
25
Notes to financial statements
Delaware Small Cap Core 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 Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the rate of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion, and 0.60% on average daily net assets in excess of $2.5 billion.
DMC may permit its affiliates, Macquarie Investment Management Global Limited (MIMGL) and Macquarie Funds Management Hong Kong Limited (together, the Affiliated Sub- Advisors), to execute Fund security trades on behalf of the Manager. The Manager may also seek quantitative support from MIMGL. Although the Affiliated Sub-Advisors serve as sub-advisors, DMC has ultimate responsibility for all investment advisory services. For these services, DMC, not the Fund, may pay each Affiliated Sub-Advisor a portion of its investment management fee.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administrative oversight services to the Fund. For these services, DIFSCs fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rates: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund in the Delaware Funds then pays its portion of the remainder of the Total Fee on a relative NAV basis. This amount is included on the Statement of operations under Accounting and administration expenses. For the six months ended May 31, 2020, the Fund was charged $79,847 for these services.
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSCs fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. This amount is included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses. For the six months ended May 31, 2020, the Fund was charged $194,140 for these services. Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the Fund. Sub-transfer agency fees are paid by the Fund and are also included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses. The fees that are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, annual 12b-1 fees of 0.25%, 1.00%, and 0.50% of the average daily net assets of the Class A shares, Class C shares, and Class R shares, respectively. These fees are calculated daily and paid monthly. Institutional Class and Class R6 shares do not pay 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that
26
provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2020, the Fund was charged $64,340 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates employees. This amount is included on the Statement of operations under Legal fees.
For the six months ended May 31, 2020, DDLP earned $12,294 for commissions on sales of the Funds Class A shares. For the six months ended May 31, 2020, DDLP received gross CDSC commissions of $184 and $3,740 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, DIFSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
In addition to the management fees and other expenses of the Fund, the Fund indirectly bears the investment management fees and other expenses of the investment companies (Underlying Funds) in which it invests. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Funds and the number of shares that are owned of the Underlying Funds at different times.
Cross trades for the six months ended May 31, 2020 were executed by the Fund pursuant to procedures adopted by the Board designed to ensure compliance with Rule 17a-7 under the 1940 Act. Cross trading is the buying or selling of portfolio securities between funds of investment companies, or between a fund of an investment company and another entity, that are or could be considered affiliates by virtue of having a common investment advisor (or affiliated investment advisors), common directors/trustees and/or common officers. At its regularly scheduled meetings, the Board reviews such transactions for compliance with the procedures adopted by the Board. Pursuant to these procedures, for the six months ended May 31, 2020, the Fund engaged in Rule 17a-7 securities sales of $1,137,710, which resulted in a net realized gain of $447,958. The Fund did not engage in Rule 17a-7 securities purchases for the six months ended May 31, 2020.
3. Investments
For the six months ended May 31, 2020, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases |
$ | 1,092,509,024 | ||
Sales |
801,605,132 |
27
Notes to financial statements
Delaware Small Cap Core Fund
3. Investments (continued)
At May 31, 2020, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes have been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2020, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:
Cost of investments |
$ | 4,806,888,301 | ||
|
|
|||
Aggregate unrealized appreciation of investments |
$ | 551,593,458 | ||
Aggregate unrealized depreciation of investments |
(629,295,828 | ) | ||
|
|
|||
Net unrealized depreciation of investments |
$ | (77,702,370 | ) | |
|
|
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entitys own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The 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, and 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, and 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 and 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.
28
The following table summarizes the valuation of the Funds investments by fair value hierarchy levels as of May 31, 2020:
Level 1 |
||||
Securities |
||||
Assets: |
||||
Common Stock |
$ | 4,613,196,481 | ||
Short-Term Investments |
115,989,450 | |||
|
|
|||
Total Value of Securities |
$ | 4,729,185,931 | ||
|
|
During the six months ended May 31, 2020, 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 based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to net assets. During the six months ended May 31, 2020, there were no Level 3 investments.
29
Notes to financial statements
Delaware Small Cap Core Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended |
Year ended | |||||||
04/30/20 | 11/30/19 | |||||||
Shares sold: |
||||||||
Class A |
1,926,761 | 3,525,026 | ||||||
Class C |
314,892 | 698,490 | ||||||
Class R |
125,543 | 259,057 | ||||||
Institutional Class |
49,221,232 | 67,539,219 | ||||||
Class R6 |
8,995,113 | 14,982,914 | ||||||
Shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
209,290 | 1,278,296 | ||||||
Class C |
127,086 | 945,352 | ||||||
Class R |
21,062 | 138,973 | ||||||
Institutional Class |
2,686,418 | 12,750,523 | ||||||
Class R6 |
423,763 | 1,809,532 | ||||||
|
|
|
|
|||||
64,051,160 | 103,927,382 | |||||||
|
|
|
|
|||||
Shares redeemed: |
||||||||
Class A |
(2,770,686 | ) | (4,815,693 | ) | ||||
Class C |
(1,274,784 | ) | (2,650,192 | ) | ||||
Class R |
(204,709 | ) | (377,314 | ) | ||||
Institutional Class |
(36,151,172 | ) | (57,842,998 | ) | ||||
Class R6 |
(4,165,469 | ) | (5,236,194 | ) | ||||
|
|
|
|
|||||
(44,566,820 | ) | (70,922,391 | ) | |||||
|
|
|
|
|||||
Net increase |
19,484,340 | 33,004,991 | ||||||
|
|
|
|
Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the table on the above and on the Statements of changes in net assets. For the six months ended May 31, 2020 and the year ended Nov. 30, 2019, the Fund had the following exchange transactions:
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||||||||||||||
Institutional | Institutional | |||||||||||||||||||||||||||||||
Class A | Class C | Class | Class R6 | Class A | Class | Class R6 | ||||||||||||||||||||||||||
Shares | Shares | Shares | Shares | Shares | Shares | Shares | Value | |||||||||||||||||||||||||
Six months ended 5/31/20 |
5,622 | 19,234 | 10,818 | | 2,628 | 20,479 | 9,654 | $ | 711,283 | |||||||||||||||||||||||
Year ended 11/30/19 |
28,993 | 16,061 | 1,919,173 | 153,502 | 1,548 | 194,245 | 1,916,718 | 49,384,010 |
32
5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $220,000,000 revolving line of credit intended 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 0.15%, which was allocated across the Participants based on a weighted average of the respective net assets of each Participant. 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. 4, 2019.
On Nov. 4, 2019, the Participants entered into an amendment to the agreement for a $250,000,000 revolving line of credit. The revolving line of credit available was increased to $275,000,000 on May 6, 2020. The revolving 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 expires on Nov. 2, 2020.
The Fund had no amounts outstanding as of May 31, 2020, or at any time during the period then ended.
6. Securities Lending
The Fund, along with other funds in the Delaware Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day, the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day, which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day, may be more or less than the value of the security on loan. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
Cash collateral received by each fund of the Trust is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities, or establishments; obligations of supranational organizations; commercial paper, notes, bonds, and other debt obligations; certificates of
31
Notes to financial statements
Delaware Small Cap Core Fund
6. Securities Lending (continued)
deposit, time deposits, and other bank obligations; and asset-backed securities. The Fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the 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 Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of the Funds cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 2020, the Fund had no securities out on loan.
7. Credit and Market Risk
The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small sized companies may be more volatile than investments in larger companies for a number of reasons, which include limited financial resources or a dependence on narrow product lines.
The Fund invests in REITs and is subject to the risks associated with that industry. If the Fund holds real estate directly or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the six months ended May 31, 2020. The Funds REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Board has delegated to DMC, 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
32
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, 2020, there were no Rule 144A securities held by the Fund.
8. 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.
9. Recent Accounting Pronouncements
In August 2018, the FASB issued an Accounting Standards Update (ASU), ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, Management is evaluating the implications of these changes on the financial statements.
10. Subsequent Events
Beginning in January 2020, global financial markets have experienced and may continue to experience significant volatility resulting from the spread of a novel coronavirus known as COVID-19. The outbreak of COVID-19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty. The effects of COVID-19 have and may continue to adversely affect the global economy, the economies of certain nations and individual issuers, all of which may negatively impact the Funds performance.
Management has determined that no material events or transactions occurred subsequent to May 31, 2020, that would require recognition or disclosure in the Funds financial statements.
33
Other Fund information (Unaudited)
Delaware Small Cap Core Fund
Liquidity Risk Management Program
The Securities and Exchange Commission (the SEC) has adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule), which requires all open-end funds (other than money market funds) to adopt and implement a program reasonably designed to assess and manage the funds liquidity risk, defined as the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors interests in the fund.
The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the Program). The Board has designated the Division Director of the US Operational Risk Group of Macquarie Asset Management as the Program Administrator for each Fund in the Trust.
As required by the Liquidity Rule, the Program includes policies and procedures that provide for: (1) assessment, management, and review (no less frequently than annually) of the Funds liquidity risk; (2) classification of each of the Funds portfolio holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid); (3) for funds that do not primarily hold assets that are Highly Liquid, establishing and maintaining a minimum percentage of the Funds net assets in Highly Liquid investments (called a Highly Liquid Investment Minimum or HLIM); and (4) prohibiting the Funds acquisition of Illiquid investments if, immediately after the acquisition, the Fund would hold more than 15% of its net assets in Illiquid assets. The Program also requires reporting to the SEC (on a non-public basis) and to the Board if the Funds holdings of Illiquid assets exceed 15% of the Funds net assets. Funds with HLIMs must have procedures for addressing HLIM shortfalls, including reporting to the Board and, with respect to HLIM shortfalls lasting more than seven consecutive calendar days, reporting to the SEC (on a non-public basis).
In assessing and managing the Funds liquidity risk, the Program Administrator considers, as relevant, a variety of factors, including: (1) the Funds investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Funds holdings of cash and cash equivalents and any borrowing arrangements. Classification of the Funds portfolio holdings in the four liquidity categories is based on the number of days it is reasonably expected to take to convert the investment to cash (for Highly Liquid and Moderately Liquid holdings) or to sell or dispose of the investment (for Less Liquid and Illiquid investments), in current market conditions without significantly changing the investments market value. The Fund primarily holds assets that are classified as Highly Liquid, and therefore is not required to establish an HLIM.
At a meeting of the Board held on May 19-21, 2020, the Program Administrator provided a written report to the Board addressing the Programs operation and assessing the adequacy and effectiveness of its implementation for the period from December 1, 2018 through March 31, 2020. The report concluded that the Program is appropriately designed and effectively implemented and that it meets the requirements of Rule 22e-4 and the Funds liquidity needs. The Funds HLIM is set at an appropriate level and the Fund complied with its HLIM at all times during the reporting period.
34
Board of trustees |
||||||
Shawn K. Lytle |
Ann D. Borowiec | Lucinda S. Landreth | Thomas K. Whitford | |||
President and Chief Executive Officer Delaware Funds® by Macquarie Philadelphia, PA
Thomas L. Bennett Chairman of the Board Delaware Funds by Macquarie Private Investor Rosemont, PA
Jerome D. Abernathy Managing Member |
Former Chief Executive Officer Private Wealth Management J.P. Morgan Chase & Co. New York, NY
Joseph W. Chow Former Executive Vice President State Street Corporation Boston, MA
John A. Fry President Drexel University |
Former Chief Investment Officer Assurant, Inc. New York, NY
Frances A. Sevilla-Sacasa Former Chief Executive Officer Banco Itaú International Miami, FL |
Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Christianna Wood Chief Executive Officer and President Gore Creek Capital, Ltd. Golden, CO
Janet L. Yeomans Former Vice President and Treasurer 3M Company St. Paul, MN | |||
Stonebrook Capital |
Philadelphia, PA | |||||
Management, LLC |
||||||
Jersey City, NJ |
||||||
Affiliated officers |
||||||
David F. Connor |
Daniel V. Geatens | Richard Salus | ||||
Senior Vice President, |
Vice President and | Senior Vice President and | ||||
General Counsel, |
Treasurer | Chief Financial Officer | ||||
and Secretary |
Delaware Funds | Delaware Funds | ||||
Delaware Funds |
by Macquarie | by Macquarie | ||||
by Macquarie |
Philadelphia, PA | Philadelphia, PA | ||||
Philadelphia, PA |
This semiannual report is for the information of Delaware Small Cap Core Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT. The Funds Forms N-PORT, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities, are available without charge (i) upon request, by calling 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 Schedule of Investments included in the Funds most recent Form N-PORT are available without charge on the Funds website at delawarefunds.com/literature. The Funds Forms N-PORT 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 delawarefunds.com/proxy; and (ii) on the SECs website at sec.gov.
35
Delaware Funds® by Macquarie privacy practices notice
We are committed to protecting the privacy of our potential, current, and former customers. To provide the products and services you request, we must collect personal information about you. We do not sell your personal information to third parties. We collect your personal information and share it with third parties as necessary to provide you with the products or services you request and to administer your business with us. This notice describes our current privacy practices. While your relationship with us continues, we will update and send our privacy practices notice as required by law. We are committed to continuing to protect your personal information even after that relationship ends. You do not need to take any action because of this notice.
i This page is not part of the semiannual report.
This page is not part of the semiannual report. ii
Delaware Funds® by Macquarie privacy practices notice
Macquarie Real Estate Absolute Return Partners, Inc.
Macquarie Total Return Fund Inc. Optimum Fund Trust
Retirement Financial Services, Inc.
Revised February 2020
iii This page is not part of the semiannual report.
This page intentionally left blank.
Delaware Funds® by Macquarie
1 On April 6, 2019, Foresters Investment Management Company, Inc. (FIMCO), the investment adviser to the First Investors Funds, entered into an agreement with Macquarie Management Holdings, Inc. (MMHI), a leading global investment management company, whereby MMHI, on behalf of its affiliate Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust (Macquarie), would acquire FIMCOs asset management business (the Transaction). In connection with the Transaction, the Board of Trustees of the First Investors Trusts approved, pursuant to an Agreement and Plan of Reorganization (the Agreement), the transfer of all assets and liabilities of each First Investors Fund to a corresponding, newly formed fund (each, an Acquiring Fund, and collectively, the Acquiring Funds) in the Delaware Funds® by Macquarie family of funds (each, a Reorganization and together, the Reorganizations). Following the requisite approval of each Reorganization from shareholders of each First Investors Fund, each Acquiring Fund is managed by DMC and each Acquiring Fund has the same or substantially the same investment objective and the same or similar principal investment strategies and principal risks as the corresponding First Investors Fund. The Transaction closed on Oct. 4, 2019 (the Closing Date). Information, including without limitation historical holdings and performance information, relating to the Acquiring Funds for periods prior to the Closing Date has been provided by FIMCO and is attributable to the Acquired Funds.
Carefully consider a Funds investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in each Funds prospectus and, if available, its summary prospectus. A Delaware Funds by Macquarie prospectus may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing.
Investing involves risk, including the possible loss of principal.
The Funds are distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
v This page is not part of the semiannual report.
2Closed to certain new investors.
3On June 10, 2020, the Board of Trustees approved a proposal to liquidate and dissolve Delaware Global Real Estate Opportunities Fund (Fund) and to appoint a new portfolio manager. The liquidation and dissolution are expected to take effect on or about Aug. 13, 2020. The Fund closed to new investors on June 19, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until five (5) days before the liquidation date. Until the liquidation, shareholders of the Fund will have the opportunity to exchange their shares for shares of the same class of any other Delaware Funds by Macquarie fund. If a shareholder does not opt to exchange his or her shares prior to the liquidation, the shareholder will be paid a liquidating distribution by the Fund.
4Effective Aug. 20, 2019, the Funds name, investment objectives, and portfolio managers changed. The new portfolio managers intend to reposition the Funds investment portfolio in accordance with its current investment process.
Because everyones tax situation is unique, you should consult your tax professional about federal, state, local, or foreign tax consequences before making an investment in the Fund.
5On May 20, 2020, the Board of Trustees unanimously voted and approved a proposal to liquidate and dissolve Delaware Government Cash Management Fund (Fund). The liquidation and dissolution are expected to take effect on or about Sept. 25, 2020. The Fund closed to new investors and all sales efforts ceased as of the close of business on Thursday, July 2, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until close of business Wednesday, Sept. 23, 2020. Until the liquidation, shareholders of the Fund will have the opportunity to exchange their shares for shares of the same class of any other Delaware Funds by Macquarie fund. Any exchange would be made at the current net asset value of the Fund and the selected Delaware Fund. The Funds shareholders would not incur front-end or contingent deferred sales charges upon these exchanges as the funds do not typically carry loads or sales charges.
This page is not part of the semiannual report. vi
Caring for your portfolio
Over a lifetime, things change. When they do, its important to ensure that your investments stay in tune with your personal situation.
vii This page is not part of the semiannual report.
This page intentionally left blank.
This page intentionally left blank.
This page intentionally left blank.
Contact information
Shareholder assistance by phone
800 523-1918, weekdays from 8:30am to
6:00pm Eastern time
For securities dealers and financial institutions representatives only
800 362-7500
Regular mail
P.O. Box 9876
Providence, RI 02940-8076
Overnight courier service
4400 Computer Drive
Westborough, MA 01581-1722
Macquarie Investment Management ● 2005 Market Street ● Philadelphia, PA 19103-7094
Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, Macquarie Capital Investment Management LLC, and Macquarie Investment Management Europe S.A.
The Fund is distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
Other than MBL, none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations.
(1228257)
xi This page is not part of the semiannual report. | SA-280 22614 [7/20] | |
|
Semiannual report
US equity mutual fund
Delaware Small Cap Value Fund
May 31, 2020
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Funds shareholder reports will no longer be sent to you by mail, unless you specifically request them from the Fund or from your financial intermediary, such as a broker/dealer, bank, or insurance company. Instead, you will be notified by mail each time a report is posted on the website and provided with a link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you do not need to take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by signing up at delawarefunds.com/edelivery. If you own these shares through a financial intermediary, you may contact your financial intermediary.
You may elect to receive paper copies of all future shareholder reports free of charge. You can inform the Fund that you wish to continue receiving paper copies of your shareholder reports by contacting us at 800 523-1918. If you own these shares through a financial intermediary, you may contact your financial intermediary to elect to continue to receive paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with the Delaware Funds® by Macquarie or your financial intermediary.
Carefully consider the 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 delawarefunds.com/literature 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 delawarefunds.com/edelivery.
Experience Delaware Funds® by Macquarie
Macquarie Investment Management (MIM) is a global asset manager with offices in the United States, Europe, Asia, and Australia. As active managers, we prioritize autonomy and accountability at the investment team level in pursuit of opportunities that matter for clients. Delaware Funds is one of the longest-standing mutual fund families, with more than 80 years in existence.
If you are interested in learning more about creating an investment plan, contact your financial advisor.
You can learn more about Delaware Funds or obtain a prospectus for Delaware Small Cap Value Fund at delawarefunds.com/literature.
For the six-month period from December 1, 2019 to May 31, 2020 (Unaudited)
The investment objective of the Fund is to seek capital appreciation.
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period from Dec. 1, 2019 to May 31, 2020.
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 assume reinvestment of all dividends and distributions.
1
Disclosure of Fund expenses
For the six-month period from December 1, 2019 to May 31, 2020 (Unaudited)
Delaware Small Cap Value Fund
Expense analysis of an investment of $1,000
Beginning Account Value |
Ending Account Value |
Annualized Expense Ratio |
Expenses Paid During Period 12/1/19 to 5/31/20* | |||||||||||||
Actual Fund return |
||||||||||||||||
Class A |
$1,000.00 | $760.30 | 1.15 | % | $5.06 | |||||||||||
Class C |
1,000.00 | 757.60 | 1.90 | % | 8.35 | |||||||||||
Class R |
1,000.00 | 759.40 | 1.40 | % | 6.16 | |||||||||||
Institutional Class |
1,000.00 | 761.50 | 0.90 | % | 3.96 | |||||||||||
Class R6 |
1,000.00 | 762.10 | 0.72 | % | 3.17 | |||||||||||
Hypothetical 5% return (5% return before expenses) |
|
|||||||||||||||
Class A |
$1,000.00 | $1,019.25 | 1.15 | % | $5.81 | |||||||||||
Class C |
1,000.00 | 1,015.50 | 1.90 | % | 9.57 | |||||||||||
Class R |
1,000.00 | 1,018.00 | 1.40 | % | 7.06 | |||||||||||
Institutional Class |
1,000.00 | 1,020.50 | 0.90 | % | 4.55 | |||||||||||
Class R6 |
1,000.00 | 1,021.40 | 0.72 | % | 3.64 | |||||||||||
*Expenses Paid During Period are equal to the Funds annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/366 (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.
In addition to the Funds expenses reflected above, the Fund also indirectly bears its portion of the fees and expenses of the investment companies (Underlying Funds) in which it invests. The table above does not reflect the expenses of the Underlying Funds.
2
Security type / sector allocation and top 10 equity holdings
Delaware Small Cap Value Fund | As of May 31, 2020 (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.
Security type / sector | Percentage of net assets | |
Common Stock² |
98.08% | |
Basic Industry |
5.93% | |
Business Services |
0.99% | |
Capital Spending |
8.85% | |
Consumer Cyclical |
4.34% | |
Consumer Services |
6.94% | |
Consumer Staples |
4.10% | |
Energy |
3.06% | |
Financial Services |
27.62% | |
Healthcare |
3.25% | |
Real Estate Investment Trusts |
8.88% | |
Technology |
14.47% | |
Transportation |
4.12% | |
Utilities |
5.53% | |
Short-Term Investments |
2.93% | |
Total Value of Securities |
101.01% | |
Liabilities Net of Receivables and Other Assets |
(1.01%) | |
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 Funds concentration guidelines as described in the Funds prospectus and statement of additional information, the Financial Services sector (as disclosed herein for financial reporting purposes) is subdivided into a variety of industries (in accordance with the requirements of the Investment Company Act of 1940). The Financial Services sector consisted of banks, diversified financial services, and insurance. As of May 31, 2020, such amounts, as a percentage of total net assets were 19.59%, 2.54%, and 5.49%, respectively. The percentage in any such single industry will comply with the Funds concentration policy even if the percentage in the Financial Services sector for financial reporting purposes may exceed 25%.
3
Security type / sector allocation and top 10 equity holdings
Delaware Small Cap Value Fund
Holdings are for informational purposes only and are subject to change at any time. They are not a recommendation to buy, sell, or hold any security.
Top 10 equity holdings | Percentage of net assets | |
East West Bancorp |
2.76% | |
ITT |
2.39% | |
Teradyne |
2.26% | |
Berry Global Group |
2.22% | |
MasTec |
2.07% | |
Stifel Financial |
1.88% | |
Werner Enterprises |
1.83% | |
Webster Financial |
1.62% | |
Hanover Insurance Group |
1.59% | |
Selective Insurance Group |
1.58% | |
4
Delaware Small Cap Value Fund | May 31, 2020 (Unaudited) |
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock 98.08%² |
||||||||
|
||||||||
Basic Industry 5.93% |
||||||||
Ashland Global Holdings |
256,999 | $ | 17,260,053 | |||||
Berry Global Group |
1,814,510 | 81,489,644 | ||||||
HB Fuller |
1,141,500 | 42,943,230 | ||||||
Huntsman |
1,061,000 | 19,257,150 | ||||||
Louisiana-Pacific |
2,393,500 | 56,510,535 | ||||||
|
|
|||||||
217,460,612 | ||||||||
|
|
|||||||
Business Services 0.99% |
||||||||
Deluxe |
513,800 | 11,986,954 | ||||||
WESCO International |
730,300 | 24,318,990 | ||||||
|
|
|||||||
36,305,944 | ||||||||
|
|
|||||||
Capital Spending 8.85% |
||||||||
Altra Industrial Motion |
1,724,443 | 53,457,733 | ||||||
Atkore International Group |
1,235,700 | 33,166,188 | ||||||
H&E Equipment Services |
929,700 | 15,935,058 | ||||||
ITT |
1,521,500 | 87,790,550 | ||||||
MasTec |
1,935,259 | 75,765,390 | ||||||
Primoris Services |
1,246,500 | 20,804,085 | ||||||
Rexnord |
1,245,600 | 37,492,560 | ||||||
|
|
|||||||
324,411,564 | ||||||||
|
|
|||||||
Consumer Cyclical 4.34% |
||||||||
Barnes Group |
868,700 | 32,819,486 | ||||||
KB Home |
1,291,100 | 42,709,588 | ||||||
Knoll |
1,677,269 | 17,711,961 | ||||||
Meritage Homes |
750,400 | 52,152,800 | ||||||
Standard Motor Products |
324,740 | 13,817,687 | ||||||
|
|
|||||||
159,211,522 | ||||||||
|
|
|||||||
Consumer Services 6.94% |
||||||||
Acushnet Holdings |
587,900 | 19,647,618 | ||||||
Asbury Automotive Group |
311,000 | 22,479,080 | ||||||
Cable One |
20,380 | 38,454,818 | ||||||
Choice Hotels International |
520,000 | 42,031,600 | ||||||
Cracker Barrel Old Country Store |
192,200 | 20,590,386 | ||||||
Steven Madden |
794,225 | 18,680,172 | ||||||
Texas Roadhouse |
496,100 | 25,722,785 | ||||||
UniFirst |
258,200 | 46,424,360 | ||||||
Wolverine World Wide |
979,341 | 20,507,401 | ||||||
|
|
|||||||
254,538,220 | ||||||||
|
|
|||||||
Consumer Staples 4.10% |
||||||||
Core-Mark Holding |
865,500 | 24,216,690 | ||||||
J&J Snack Foods |
301,600 | 38,794,808 | ||||||
Performance Food Group |
739,654 | 19,711,779 |
5
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock² (continued) |
||||||||
|
||||||||
Consumer Staples (continued) |
||||||||
Scotts Miracle-Gro |
299,800 | $ | 42,742,486 | |||||
Spectrum Brands Holdings |
528,050 | 24,987,326 | ||||||
|
|
|||||||
150,453,089 | ||||||||
|
|
|||||||
Energy 3.06% |
||||||||
CNX Resources |
2,340,600 | 23,850,714 | ||||||
Delek US Holdings |
1,231,900 | 24,231,473 | ||||||
Dril-Quip |
584,600 | 17,765,994 | ||||||
Helix Energy Solutions Group |
3,403,200 | 11,434,752 | ||||||
Patterson-UTI Energy |
3,092,100 | 11,409,849 | ||||||
WPX Energy |
4,134,600 | 23,443,182 | ||||||
|
|
|||||||
112,135,964 | ||||||||
|
|
|||||||
Financial Services 27.62% |
||||||||
American Equity Investment Life Holding |
2,395,500 | 51,958,395 | ||||||
Bank of NT Butterfield & Son |
1,035,800 | 25,304,594 | ||||||
East West Bancorp |
2,899,323 | 101,331,338 | ||||||
First Financial Bancorp |
2,425,800 | 32,238,882 | ||||||
First Hawaiian |
1,826,900 | 31,514,025 | ||||||
First Interstate BancSystem Class A |
1,018,200 | 31,818,750 | ||||||
First Midwest Bancorp |
2,707,300 | 35,330,265 | ||||||
FNB |
6,824,400 | 50,568,804 | ||||||
Great Western Bancorp |
2,048,050 | 29,164,232 | ||||||
Hancock Whitney |
2,502,200 | 54,097,564 | ||||||
Hanover Insurance Group |
579,100 | 58,112,685 | ||||||
Kemper |
524,800 | 33,272,320 | ||||||
Legg Mason |
484,000 | 24,117,720 | ||||||
NBT Bancorp |
712,800 | 22,324,896 | ||||||
Prosperity Bancshares |
651,600 | 42,608,124 | ||||||
S&T Bancorp |
788,456 | 17,535,262 | ||||||
Sandy Spring Bancorp |
482,500 | 11,700,625 | ||||||
Selective Insurance Group |
1,101,606 | 57,779,235 | ||||||
Stifel Financial |
1,446,400 | 69,007,744 | ||||||
Umpqua Holdings |
4,602,100 | 52,417,919 | ||||||
Valley National Bancorp |
5,443,100 | 43,435,938 | ||||||
Webster Financial |
2,092,600 | 59,220,580 | ||||||
WesBanco |
1,065,500 | 22,823,010 | ||||||
Western Alliance Bancorp |
1,439,300 | 54,909,295 | ||||||
|
|
|||||||
1,012,592,202 | ||||||||
|
|
|||||||
Healthcare 3.25% |
||||||||
Avanos Medical |
1,025,000 | 29,786,500 | ||||||
Catalent |
463,500 | 36,027,855 | ||||||
Integer Holdings |
358,700 | 28,401,866 |
6
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock² (continued) |
||||||||
|
||||||||
Healthcare (continued) |
||||||||
Service Corp. International |
634,300 | $ | 25,010,449 | |||||
|
|
|||||||
119,226,670 | ||||||||
|
|
|||||||
Real Estate Investment Trusts 8.88% |
||||||||
Brandywine Realty Trust |
3,976,937 | 38,377,442 | ||||||
Highwoods Properties |
1,199,600 | 45,908,692 | ||||||
Kite Realty Group Trust |
1,177,357 | 11,420,363 | ||||||
Lexington Realty Trust |
4,473,800 | 43,485,336 | ||||||
Life Storage |
461,400 | 44,977,272 | ||||||
Outfront Media |
2,925,600 | 41,075,424 | ||||||
RPT Realty |
2,482,989 | 14,326,846 | ||||||
Spirit Realty Capital |
1,273,700 | 36,211,291 | ||||||
STAG Industrial |
760,281 | 20,451,559 | ||||||
Summit Hotel Properties |
2,934,200 | 18,338,750 | ||||||
Washington Real Estate Investment Trust |
493,400 | 10,820,262 | ||||||
|
|
|||||||
325,393,237 | ||||||||
|
|
|||||||
Technology 14.47% |
||||||||
Cirrus Logic |
649,400 | 47,068,512 | ||||||
Coherent |
229,700 | 33,354,737 | ||||||
Diodes |
429,300 | 20,881,152 | ||||||
Flex |
4,949,869 | 48,063,228 | ||||||
NCR |
1,524,507 | 27,517,351 | ||||||
NetScout Systems |
1,159,506 | 31,851,630 | ||||||
ON Semiconductor |
2,728,900 | 44,999,561 | ||||||
SYNNEX |
294,700 | 31,429,755 | ||||||
Tech Data |
125,419 | 17,087,085 | ||||||
Teradyne |
1,237,700 | 82,950,654 | ||||||
Tower Semiconductor |
2,077,800 | 41,784,558 | ||||||
TTM Technologies |
3,387,502 | 39,193,398 | ||||||
Viavi Solutions |
3,086,900 | 35,777,171 | ||||||
Vishay Intertechnology |
1,745,500 | 28,381,830 | ||||||
|
|
|||||||
530,340,622 | ||||||||
|
|
|||||||
Transportation 4.12% |
||||||||
Kirby |
533,400 | 27,352,752 | ||||||
Saia |
367,050 | 39,802,902 | ||||||
SkyWest |
524,400 | 16,817,508 | ||||||
Werner Enterprises |
1,448,700 | 66,958,914 | ||||||
|
|
|||||||
150,932,076 | ||||||||
|
|
|||||||
Utilities 5.53% |
||||||||
ALLETE |
555,100 | 32,601,023 | ||||||
Black Hills |
776,900 | 47,942,499 | ||||||
El Paso Electric |
153,800 | 10,453,786 |
7
Schedule of investments
Delaware Small Cap Value Fund
Number of shares | Value (US $) | |||||||
|
||||||||
Common Stock² (continued) |
||||||||
|
||||||||
Utilities (continued) |
||||||||
PNM Resources |
742,300 | $ | 30,300,686 | |||||
South Jersey Industries |
996,500 | 28,260,740 | ||||||
Southwest Gas Holdings |
701,900 | 53,309,305 | ||||||
|
|
|||||||
202,868,039 | ||||||||
|
|
|||||||
Total Common Stock (cost $3,413,194,143) |
3,595,869,761 | |||||||
|
|
|||||||
|
||||||||
Short-Term Investments 2.93% |
||||||||
|
||||||||
Money Market Mutual Funds 2.93% |
||||||||
BlackRock FedFund Institutional Shares (seven-day effective yield 0.11%) |
21,444,565 | 21,444,565 | ||||||
Fidelity Investments Money Market Government Portfolio Class I (seven-day effective yield 0.08%) |
21,444,564 | 21,444,564 | ||||||
GS Financial Square Government Fund Institutional Shares (seven-day effective yield 0.16%) |
21,444,564 | 21,444,564 | ||||||
Morgan Stanley Government Portfolio Institutional Share Class (seven-day effective yield 0.07%) |
21,444,565 | 21,444,565 | ||||||
State Street Institutional US Government Money Market Fund Investor Class (seven-day effective yield 0.05%) |
21,444,565 | 21,444,565 | ||||||
|
|
|||||||
Total Short-Term Investments (cost $107,222,823) |
107,222,823 | |||||||
|
|
|||||||
Total Value of Securities 101.01% |
$ | 3,703,092,584 | ||||||
|
|
² | Narrow industries are utilized for compliance purposes for diversification whereas broad sectors are used for financial reporting. |
| Non-income producing security. |
GS Goldman Sachs
See accompanying notes, which are an integral part of the financial statements.
8
This page intentionally left blank.
Statement of assets and liabilities
Delaware Small Cap Value Fund |
May 31, 2020 (Unaudited) |
Assets: |
||||
Investments, at value1 |
$ | 3,703,092,584 | ||
Receivable for fund shares sold |
32,869,729 | |||
Dividends and interest receivable |
7,000,662 | |||
|
|
|||
Total assets |
3,742,962,975 | |||
|
|
|||
Liabilities: |
||||
Payable for fund shares redeemed |
65,393,123 | |||
Payable for securities purchased |
7,456,578 | |||
Investment management fees payable to affiliates |
1,931,459 | |||
Other accrued expenses |
1,832,193 | |||
Distribution fees payable to affiliates |
145,559 | |||
Dividend disbursing and transfer agent fees and expenses payable to affiliates |
28,721 | |||
Trustees fees and expenses payable to affiliates |
13,304 | |||
Accounting and administration expenses payable to affiliates |
10,605 | |||
Legal fees payable to affiliates |
6,609 | |||
|
|
|||
Total liabilities |
76,818,151 | |||
|
|
|||
Total Net Assets |
$ | 3,666,144,824 | ||
|
|
|||
Net Assets Consist of: |
||||
Paid-in capital |
$ | 3,634,683,382 | ||
Total distributable earnings (loss) |
31,461,442 | |||
|
|
|||
Total Net Assets |
$ | 3,666,144,824 | ||
|
|
10
Net Asset Value |
||||
Class A: |
||||
Net assets |
$ | 467,451,753 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
10,412,118 | |||
Net asset value per share |
$ | 44.89 | ||
Sales charge |
5.75 | % | ||
Offering price per share, equal to net asset value per share / (1 sales charge) |
$ | 47.63 | ||
Class C: |
||||
Net assets |
$ | 45,421,103 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
1,255,390 | |||
Net asset value per share |
$ | 36.18 | ||
Class R: |
||||
Net assets |
$ | 38,018,812 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
876,321 | |||
Net asset value per share |
$ | 43.38 | ||
Institutional Class: |
||||
Net assets |
$ | 2,474,936,467 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
51,929,596 | |||
Net asset value per share |
$ | 47.66 | ||
Class R6: |
||||
Net assets |
$ | 640,316,689 | ||
Shares of beneficial interest outstanding, unlimited authorization, no par |
13,415,445 | |||
Net asset value per share |
$ | 47.73 | ||
1Investments, at cost |
$ | 3,520,416,966 |
See accompanying notes, which are an integral part of the financial statements.
11
Delaware Small Cap Value Fund |
Six months ended May 31, 2020 (Unaudited) |
Investment Income: |
||||
Dividends |
$ | 41,311,671 | ||
|
|
|||
Expenses: |
||||
Management fees |
12,435,695 | |||
Dividend disbursing and transfer agent fees and expenses |
3,193,776 | |||
Distribution expenses Class A |
659,533 | |||
Distribution expenses Class C |
282,784 | |||
Distribution expenses Class R |
113,861 | |||
Accounting and administration expenses |
312,567 | |||
Reports and statements to shareholders expenses |
215,209 | |||
Trustees fees and expenses |
105,738 | |||
Legal fees |
103,065 | |||
Registration fees |
86,328 | |||
Custodian fees |
60,310 | |||
Audit and tax fees |
18,024 | |||
Other |
51,043 | |||
|
|
|||
17,637,933 | ||||
Less expenses paid indirectly |
(8,740 | ) | ||
|
|
|||
Total operating expenses |
17,629,193 | |||
|
|
|||
Net Investment Income |
23,682,478 | |||
|
|
|||
Net Realized and Unrealized Loss: |
||||
Net realized loss on investments |
(146,375,886 | ) | ||
Net change in unrealized appreciation (depreciation) of investments |
(862,035,059 | ) | ||
|
|
|||
Net Realized and Unrealized Loss |
(1,008,410,945 | ) | ||
|
|
|||
Net Decrease in Net Assets Resulting from Operations |
$ | (984,728,467 | ) | |
|
|
See accompanying notes, which are an integral part of the financial statements.
12
This page intentionally left blank.
Statements of changes in net assets
Delaware Small Cap Value Fund
Six months ended 5/31/20 (Unaudited) |
Year ended 11/30/19 |
|||||||
Increase (Decrease) in Net Assets from Operations: |
||||||||
Net investment income |
$ | 23,682,478 | $ | 44,693,729 | ||||
Net realized gain (loss) |
(146,375,886 | ) | 138,185,186 | |||||
Net change in unrealized appreciation (depreciation) |
(862,035,059 | ) | 171,381,637 | |||||
|
|
|
|
|||||
Net increase (decrease) in net assets resulting from operations |
(984,728,467 | ) | 354,260,552 | |||||
|
|
|
|
|||||
Dividends and Distributions to Shareholders from: |
||||||||
Distributable earnings: |
||||||||
Class A |
(26,836,930 | ) | (48,159,678 | ) | ||||
Class C |
(3,124,333 | ) | (5,793,001 | ) | ||||
Class R |
(2,279,071 | ) | (4,426,662 | ) | ||||
Institutional Class |
(124,086,181 | ) | (192,050,571 | ) | ||||
Class R6 |
(27,982,274 | ) | (29,190,659 | ) | ||||
|
|
|
|
|||||
(184,308,789 | ) | (279,620,571 | ) | |||||
|
|
|
|
|||||
Capital Share Transactions: |
||||||||
Proceeds from shares sold: |
||||||||
Class A |
74,418,804 | 125,669,755 | ||||||
Class C |
6,133,541 | 12,928,017 | ||||||
Class R |
6,064,424 | 12,291,124 | ||||||
Institutional Class |
718,955,523 | 876,690,020 | ||||||
Class R6 |
357,828,481 | 281,229,086 | ||||||
Net asset value of shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
26,442,390 | 47,116,404 | ||||||
Class C |
3,058,818 | 5,707,402 | ||||||
Class R |
2,278,860 | 4,426,273 | ||||||
Institutional Class |
120,505,849 | 186,340,898 | ||||||
Class R6 |
26,477,062 | 28,524,928 | ||||||
|
|
|
|
|||||
1,342,163,752 | 1,580,923,907 | |||||||
|
|
|
|
14
Six months ended 5/31/20 (Unaudited) |
Year ended 11/30/19 |
|||||||
Capital Share Transactions (continued): |
||||||||
Cost of shares redeemed: |
||||||||
Class A |
$ | (100,425,436 | ) | $ | (273,609,076 | ) | ||
Class C |
(13,010,477 | ) | (23,929,760 | ) | ||||
Class R |
(11,188,301 | ) | (23,592,812 | ) | ||||
Institutional Class |
(555,092,303 | ) | (888,513,776 | ) | ||||
Class R6 |
(150,736,774 | ) | (119,337,638 | ) | ||||
|
|
|
|
|||||
(830,453,291 | ) | (1,328,983,062 | ) | |||||
|
|
|
|
|||||
Increase in net assets derived from capital share transactions |
511,710,461 | 251,940,845 | ||||||
|
|
|
|
|||||
Net Increase (Decrease) in Net Assets |
(657,326,795 | ) | 326,580,826 | |||||
Net Assets: |
||||||||
Beginning of period |
4,323,471,619 | 3,996,890,793 | ||||||
|
|
|
|
|||||
End of period |
$ | 3,666,144,824 | $ | 4,323,471,619 | ||||
|
|
|
|
See accompanying notes, which are an integral part of the financial statements.
15
Delaware Small Cap Value Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
||
Income (loss) from investment operations: |
||
Net investment income2 |
||
Net realized and unrealized gain (loss) |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Net realized gain |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets4 |
||
Ratio of net investment income to average net assets |
||
Portfolio turnover |
||
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
16
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 61.58 | $ | 61.81 | $ | 67.13 | $ | 58.16 | $ | 52.55 | $ | 54.87 | |||||||||||||||
0.26 | 0.52 | 0.37 | 0.34 | 0.28 | 0.32 | |||||||||||||||||||||
(14.33 | ) | 3.63 | (4.81 | ) | 8.94 | 8.55 | 0.16 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(14.07 | ) | 4.15 | (4.44 | ) | 9.28 | 8.83 | 0.48 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.58 | ) | (0.42 | ) | (0.27 | ) | (0.31 | ) | (0.32 | ) | (0.18 | ) | |||||||||||||||
(2.04 | ) | (3.96 | ) | (0.61 | ) | | (2.90 | ) | (2.62 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.62 | ) | (4.38 | ) | (0.88 | ) | (0.31 | ) | (3.22 | ) | (2.80 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 44.89 | $ | 61.58 | $ | 61.81 | $ | 67.13 | $ | 58.16 | $ | 52.55 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(23.97% | ) | 8.69% | (6.70% | ) | 16.01% | 18.47% | 0.90% | |||||||||||||||||||
$ | 467,452 | $ | 637,146 | $ | 733,864 | $ | 881,709 | $ | 870,158 | $ | 794,664 | |||||||||||||||
1.15% | 1.15% | 1.15% | 1.18% | 1.24% | 1.22% | |||||||||||||||||||||
1.02% | 0.90% | 0.56% | 0.55% | 0.57% | 0.62% | |||||||||||||||||||||
12% | 18% | 18% | 15% | 19% | 20% | |||||||||||||||||||||
|
|
17
Financial highlights
Delaware Small Cap Value Fund Class C
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
||
Income (loss) from investment operations: |
||
Net investment income (loss)2 |
||
Net realized and unrealized gain (loss) |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Net realized gain |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets4 |
||
Ratio of net investment income (loss) to average net assets |
||
Portfolio turnover |
||
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value and does not reflect the impact of a sales charge. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
18
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 49.95 | $ | 50.96 | $ | 55.65 | $ | 48.34 | $ | 44.24 | $ | 46.79 | |||||||||||||||
0.06 | 0.07 | (0.10 | ) | (0.10 | ) | (0.07 | ) | (0.06 | ) | |||||||||||||||||
(11.57 | ) | 2.88 | (3.98 | ) | 7.43 | 7.09 | 0.13 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(11.51 | ) | 2.95 | (4.08 | ) | 7.33 | 7.02 | 0.07 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.22 | ) | | | (0.02 | ) | (0.02 | ) | | ||||||||||||||||||
(2.04 | ) | (3.96 | ) | (0.61 | ) | | (2.90 | ) | (2.62 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.26 | ) | (3.96 | ) | (0.61 | ) | (0.02 | ) | (2.92 | ) | (2.62 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 36.18 | $ | 49.95 | $ | 50.96 | $ | 55.65 | $ | 48.34 | $ | 44.24 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(24.24% | ) | 7.88% | (7.41% | ) | 15.17% | 17.58% | 0.14% | |||||||||||||||||||
$ | 45,421 | $ | 69,109 | $ | 74,828 | $ | 105,757 | $ | 107,104 | $ | 108,890 | |||||||||||||||
1.90% | 1.90% | 1.90% | 1.93% | 1.99% | 1.97% | |||||||||||||||||||||
0.27% | 0.15% | (0.19% | ) | (0.20% | ) | (0.18% | ) | (0.13% | ) | |||||||||||||||||
12% | 18% | 18% | 15% | 19% | 20% | |||||||||||||||||||||
|
|
19
Financial highlights
Delaware Small Cap Value Fund Class R
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
||
Income (loss) from investment operations: |
||
Net investment income2 |
||
Net realized and unrealized gain (loss) |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Net realized gain |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets4 |
||
Ratio of net investment income to average net assets |
||
Portfolio turnover |
||
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
20
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 59.52 | $ | 59.86 | $ | 65.05 | $ | 56.40 | $ | 51.05 | $ | 53.39 | |||||||||||||||
0.19 | 0.36 | 0.20 | 0.18 | 0.15 | 0.19 | |||||||||||||||||||||
(13.85 | ) | 3.52 | (4.66 | ) | 8.66 | 8.30 | 0.14 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(13.66 | ) | 3.88 | (4.46 | ) | 8.84 | 8.45 | 0.33 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.44 | ) | (0.26 | ) | (0.12 | ) | (0.19 | ) | (0.20 | ) | (0.05 | ) | |||||||||||||||
(2.04 | ) | (3.96 | ) | (0.61 | ) | | (2.90 | ) | (2.62 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.48 | ) | (4.22 | ) | (0.73 | ) | (0.19 | ) | (3.10 | ) | (2.67 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 43.38 | $ | 59.52 | $ | 59.86 | $ | 65.05 | $ | 56.40 | $ | 51.05 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(24.06% | ) | 8.42% | (6.92% | ) | 15.71% | 18.19% | 0.63% | |||||||||||||||||||
$ | 38,019 | $ | 55,697 | $ | 62,791 | $ | 84,131 | $ | 83,557 | $ | 81,187 | |||||||||||||||
1.40% | 1.40% | 1.40% | 1.43% | 1.49% | 1.47% | |||||||||||||||||||||
0.77% | 0.65% | 0.31% | 0.30% | 0.32% | 0.37% | |||||||||||||||||||||
12% | 18% | 18% | 15% | 19% | 20% | |||||||||||||||||||||
|
|
21
Financial highlights
Delaware Small Cap Value Fund Institutional Class
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
||
Income (loss) from investment operations: |
||
Net investment income2 |
||
Net realized and unrealized gain (loss) |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Net realized gain |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return3 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets4 |
||
Ratio of net investment income to average net assets |
||
Portfolio turnover |
||
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | The average shares outstanding method has been applied for per share information. |
3 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
4 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
See accompanying notes, which are an integral part of the financial statements.
22
Six months ended 5/31/201 |
Year ended | |||||||||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | 11/30/16 | 11/30/15 | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||
$ | 65.28 | $ | 65.29 | $ | 70.83 | $ | 61.32 | $ | 55.23 | $ | 57.52 | |||||||||||||||
0.34 | 0.70 | 0.57 | 0.52 | 0.42 | 0.48 | |||||||||||||||||||||
(15.18 | ) | 3.86 | (5.08 | ) | 9.42 | 9.02 | 0.16 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(14.84 | ) | 4.56 | (4.51 | ) | 9.94 | 9.44 | 0.64 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(0.74 | ) | (0.61 | ) | (0.42 | ) | (0.43 | ) | (0.45 | ) | (0.31 | ) | |||||||||||||||
(2.04 | ) | (3.96 | ) | (0.61 | ) | | (2.90 | ) | (2.62 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(2.78 | ) | (4.57 | ) | (1.03 | ) | (0.43 | ) | (3.35 | ) | (2.93 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$ | 47.66 | $ | 65.28 | $ | 65.29 | $ | 70.83 | $ | 61.32 | $ | 55.23 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
(23.85% | ) | 8.95% | (6.46% | ) | 16.30% | 18.77% | 1.15% | |||||||||||||||||||
$ | 2,474,936 | $ | 2,955,897 | $ | 2,731,344 | $ | 3,270,954 | $ | 2,166,172 | $ | 1,969,355 | |||||||||||||||
0.90% | 0.90% | 0.90% | 0.93% | 0.99% | 0.97% | |||||||||||||||||||||
1.27% | 1.15% | 0.81% | 0.80% | 0.82% | 0.87% | |||||||||||||||||||||
12% | 18% | 18% | 15% | 19% | 20% | |||||||||||||||||||||
|
|
23
Financial highlights
Delaware Small Cap Value Fund Class R6
Selected data for each share of the Fund outstanding throughout each period were as follows:
Net asset value, beginning of period |
||
Income (loss) from investment operations: |
||
Net investment income3 |
||
Net realized and unrealized gain (loss) |
||
Total from investment operations |
||
Less dividends and distributions from: |
||
Net investment income |
||
Net realized gain |
||
Total dividends and distributions |
||
Net asset value, end of period |
||
Total return4 |
||
Ratios and supplemental data: |
||
Net assets, end of period (000 omitted) |
||
Ratio of expenses to average net assets5 |
||
Ratio of net investment income to average net assets |
||
Portfolio turnover |
||
1 | Ratios have been annualized and total return and portfolio turnover have not been annualized. |
2 | Date of commencement of operations; ratios have been annualized and total return has not been annualized. |
3 | The average shares outstanding method has been applied for per share information. |
4 | Total return is based on the change in net asset value of a share during the period and assumes reinvestment of dividends and distributions at net asset value. |
5 | Expense ratios do not include expenses of the Underlying Funds in which the Fund invests. |
6 | Portfolio turnover is representative of the Fund for the entire year ended Nov. 30, 2016. |
See accompanying notes, which are an integral part of the financial statements.
24
Six months ended 5/31/201 |
Year ended | 5/2/162 to 11/30/16 |
||||||||||||||||||
(Unaudited) | 11/30/19 | 11/30/18 | 11/30/17 | |||||||||||||||||
$ | 65.41 | $ | 65.41 | $ | 70.95 | $ | 61.38 | $ | 51.46 | |||||||||||
0.39 | 0.81 | 0.69 | 0.65 | 0.32 | ||||||||||||||||
(15.19) | 3.85 | (5.08) | 9.43 | 9.60 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(14.80) | 4.66 | (4.39) | 10.08 | 9.92 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(0.84) | (0.70) | (0.54) | (0.51) | | ||||||||||||||||
(2.04) | (3.96) | (0.61) | | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(2.88) | (4.66) | (1.15) | (0.51) | | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 47.73 | $ | 65.41 | $ | 65.41 | $ | 70.95 | $ | 61.38 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
(23.79% | ) | 9.14% | (6.29% | ) | 16.52% | 19.28% | ||||||||||||||
$ | 640,317 | $ | 605,623 | $ | 394,064 | $ | 207,719 | $ | 4,187 | |||||||||||
0.72% | 0.72% | 0.72% | 0.75% | 0.77% | ||||||||||||||||
1.45% | 1.33% | 0.99% | 0.98% | 0.96% | ||||||||||||||||
12% | 18% | 18% | 15% | 19% | 6 |
25
Notes to financial statements | ||
Delaware Small Cap Value Fund | May 31, 2020 (Unaudited) |
Delaware Group® Equity Funds V (Trust) is organized as a Delaware statutory trust and offers three series: Delaware Wealth Builder Fund, Delaware Small Cap Core Fund, and Delaware Small Cap Value Fund. These financial statements and the related notes pertain to Delaware Small Cap Value Fund (Fund). The Fund is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class C, Class R, Institutional Class, and Class R6 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) instead of a front-end sales charge of 1.00%, if redeemed during the first year and 0.50% during the second year, provided that Delaware Distributors, L.P. (DDLP) paid a financial advisor a commission on the purchase of those shares. Class C shares are sold with a CDSC of 1.00%, which will be incurred if redeemed during the first 12 months. Class R, Institutional Class, and Class R6 shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Class R6 shares do not pay any service fees, sub-accounting fees, and/or sub-transfer agency fees to any brokers, dealers, or other financial intermediaries.
1. Significant Accounting Policies
The Fund follows accounting and reporting guidance under Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services Investment Companies. The following accounting policies are in accordance with US generally accepted accounting principles (US GAAP) and are consistently followed by the Fund.
Security Valuation Equity securities and exchange-traded funds (ETFs), except those traded on the Nasdaq Stock Market LLC (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange on the valuation date. Equity securities and ETFs traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If, on a particular day, an equity security or ETF does not trade, the mean between the bid and ask prices will be used, which approximates fair value. Open-end investment companies are valued at their published net asset value (NAV). US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. 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 Trusts Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. Restricted securities are valued at fair value using methods approved by the Board.
Federal and Foreign Income Taxes No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the 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 or expected to be taken on the Funds federal income tax returns through the six months ended May 31, 2020 and for all open tax years
26
(years ended Nov. 30, 2017Nov. 30, 2019), and has concluded that no provision for federal income tax is required in the Funds financial statements. If applicable, the Fund recognizes interest accrued on unrecognized tax benefits in interest expense and penalties in Other on the Statement of operations. During the six months ended May 31, 2020, the Fund did not incur any interest or tax penalties. In regard to foreign taxes only, the Fund has open tax years in certain foreign countries in which it invests that may date back to the inception of the Fund.
Class Accounting Investment income, common expenses, and realized and unrealized gain (loss) on investments are allocated to the various classes of the Fund on the basis of daily net assets of each class. Distribution expenses relating to a specific class are charged directly to that class. Class R6 shares are not allocated any expenses related to service fees, sub-accounting fees, and/or sub-transfer agency fees paid to brokers, dealers, or financial intermediaries.
Underlying Funds The Fund may invest in other investment companies (Underlying Funds) to the extent permitted by the 1940 Act. The Underlying Funds in which the Fund invests include business development corporations (BDC) and ETFs. The Fund will indirectly bear the investment management fees and other expenses of the Underlying Funds.
Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the fair value of investments, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and the differences could be material.
Other Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Funds® by Macquarie (Delaware Funds) are generally allocated among such funds on the basis of average net assets. Management fees and certain other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on debt securities are accreted or amortized to interest income, respectively, over the lives of the respective securities using the effective interest method. Distributions received from investments in real estate investment trusts (REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer. The Fund declares and pays dividends from net investment income and distributions from net realized gain on investments, if any, annually. The Fund may distribute more frequently, if necessary for tax purposes. Dividends and distributions, if any, are recorded on the ex-dividend date.
The Fund receives earnings credits from its custodian when positive cash balances are maintained, which may be used to offset custody fees. The expenses paid under this arrangement are included on the Statement of operations under Custodian fees with the corresponding expenses offset included under Less expenses paid indirectly. For the six months ended May 31, 2020, the Fund earned $7,675 under this arrangement.
27
Notes to financial statements
Delaware Small Cap Value 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 $1, the expenses paid under this arrangement are included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses with the corresponding expenses offset included under Less expenses paid indirectly. For the six months ended May 31, 2020, the Fund earned $1,065 under this arrangement.
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust and the investment manager, an annual fee which is calculated daily and paid monthly at the rates of 0.75% on the first $500 million of average daily net assets of the Fund, 0.70% on the next $500 million, 0.65% on the next $1.5 billion, and 0.60% on average daily net assets in excess of $2.5 billion.
DMC may permit its affiliates, Macquarie Investment Management Global Limited (MIMGL) and Macquarie Funds Management Hong Kong Limited (together, the Affiliated Sub-Advisors), to execute Fund equity security trades on behalf of the Manager. The Manager may also seek quantitative support from MIMGL. Although the Affiliated Sub-Advisors serve as sub-advisors, DMC has ultimate responsibility for all investment advisory services. For these services, DMC, not the Fund, may pay each Affiliated Sub-Advisor a portion of its investment management fee.
Delaware Investments Fund Services Company (DIFSC), an affiliate of DMC, provides fund accounting and financial administrative oversight services to the Fund. For these services, DIFSCs fees are calculated daily and paid monthly based on the aggregate daily net assets of all funds within the Delaware Funds at the following annual rates: 0.00475% of the first $35 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $45 billion (Total Fee). Each fund in the Delaware Funds pays a minimum of $4,000, which, in aggregate, is subtracted from the Total Fee. Each fund then pays its portion of the remainder of the Total Fee on a relative NAV basis. This amount is included on the Statement of operations under Accounting and administration expenses. For the six months ended May 31, 2020, the Fund was charged $66,881 for these services.
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSCs fees are calculated daily and paid monthly based on the aggregate daily net assets of the retail funds within the Delaware Funds at the following annual rates: 0.014% of the first $20 billion; 0.011% of the next $5 billion; 0.007% of the next $5 billion; 0.005% of the next $20 billion; and 0.0025% of average daily net assets in excess of $50 billion. The fees payable to DIFSC under the shareholder services agreement described above are allocated among all retail funds in the Delaware Funds on a relative NAV basis. This amount is included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses. For the six months ended May 31, 2020, the Fund was charged $159,872 for these services. Pursuant to a sub-transfer agency agreement between DIFSC and BNY Mellon Investment Servicing (US) Inc. (BNYMIS), BNYMIS provides certain sub-transfer agency services to the
28
Fund. Sub-transfer agency fees are paid by the Fund and are also included on the Statement of operations under Dividend disbursing and transfer agent fees and expenses. The fees that are calculated daily and paid as invoices are received on a monthly or quarterly basis.
Pursuant to a distribution agreement and distribution plan, the Fund pays DDLP, the distributor and an affiliate of DMC, an annual 12b-1 fee of 0.25%, 1.00%, and 0.50% of the average daily net assets of the Class A, Class C, and Class R shares, respectively. These fees are calculated daily and paid monthly. Class R6 and Institutional Class shares do not pay 12b-1 fees.
As provided in the investment management agreement, the Fund bears a portion of the cost of certain resources shared with DMC, including the cost of internal personnel of DMC and/or its affiliates that provide legal, tax, and regulatory reporting services to the Fund. For the six months ended May 31, 2020, the Fund was charged $54,124 for internal legal, tax, and regulatory reporting services provided by DMC and/or its affiliates employees. This amount is included on the Statement of operations under Legal fees.
For the six months ended May 31, 2020, DDLP earned $15,669 for commissions on sales of the Funds Class A shares. For the six months ended May 31, 2020, DDLP received gross CDSC commissions of $1,976 and $3,311 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, DIFSC, and DDLP are officers and/or Trustees of the Trust. These officers and Trustees are paid no compensation by the Fund.
In addition to the management fees and other expenses of the Fund, the Fund indirectly bears the investment management fees and other expenses of the investment companies (Underlying Funds) in which it invests. The amount of these fees and expenses incurred indirectly by the Fund will vary based upon the expense and fee levels of the Underlying Funds and the number of shares that are owned of the Underlying Funds at different times.
3. Investments
For the six months ended May 31, 2020, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases |
$818,351,246 | |||
Sales |
439,582,116 |
29
Notes to financial statements
Delaware Small Cap Value Fund
3. Investments (continued)
At May 31, 2020, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes have been estimated since final tax characteristics cannot be determined until fiscal year end. At May 31, 2020, the cost and unrealized appreciation (depreciation) of investments for the Fund were as follows:
Cost of investments |
$ | 3,520,416,966 | ||
|
|
|||
Aggregate unrealized appreciation of investments |
$ | 670,284,229 | ||
Aggregate unrealized depreciation of investments |
(487,608,611 | ) | ||
|
|
|||
Net unrealized appreciation of investments |
$ | 182,675,618 | ||
|
|
US GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three-level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entitys own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available under the circumstances. The 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, and 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, and 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 and 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.
30
The following table summarizes the valuation of the Funds investments by fair value hierarchy levels as of May 31, 2020:
Level 1 | ||||
Securities |
||||
Assets: |
||||
Common Stock |
$ | 3,595,869,761 | ||
Short-Term Investments |
107,222,823 | |||
|
|
|||
Total Value of Securities |
$ | 3,703,092,584 | ||
|
|
During the six months ended May 31, 2020, 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 based on fair value at the beginning of the reporting period.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim, or end of the period in relation to the Funds net assets. During the six months ended May 31, 2020, there were no Level 3 investments.
31
Notes to financial statements
Delaware Small Cap Value Fund
4. Capital Shares
Transactions in capital shares were as follows:
Six months ended 5/31/20 |
Year ended 11/30/19 |
|||||||
Shares sold: |
||||||||
Class A |
1,612,021 | 2,210,400 | ||||||
Class C |
146,998 | 285,091 | ||||||
Class R |
130,765 | 221,304 | ||||||
Institutional Class |
15,573,475 | 14,452,689 | ||||||
Class R6 |
6,739,562 | 4,643,083 | ||||||
Shares issued upon reinvestment of dividends and distributions: |
||||||||
Class A |
433,909 | 977,924 | ||||||
Class C |
62,070 | 145,005 | ||||||
Class R |
38,657 | 94,822 | ||||||
Institutional Class |
1,864,838 | 3,655,894 | ||||||
Class R6 |
409,481 | 559,532 | ||||||
|
|
|
|
|||||
27,011,776 | 27,245,744 | |||||||
|
|
|
|
|||||
Shares redeemed: |
||||||||
Class A |
(1,981,022 | ) | (4,713,812 | ) | ||||
Class C |
(337,309 | ) | (514,743 | ) | ||||
Class R |
(228,915 | ) | (429,251 | ) | ||||
Institutional Class |
(10,786,241 | ) | (14,666,586 | ) | ||||
Class R6 |
(2,992,420 | ) | (1,968,495 | ) | ||||
|
|
|
|
|||||
(16,325,907 | ) | (22,292,887 | ) | |||||
|
|
|
|
|||||
Net increase |
10,685,869 | 4,952,857 | ||||||
|
|
|
|
Certain shareholders may exchange shares of one class for shares of another class in the same Fund. These exchange transactions are included as subscriptions and redemptions in the table above and on the Statements of changes in net assets. For the six months ended May 31, 2020 and the year ended Nov. 30, 2019, the Fund had the following exchange transactions:
Exchange Redemptions | Exchange Subscriptions | |||||||||||||||||||||||||||||||
Institutional | Institutional | |||||||||||||||||||||||||||||||
Class A | Class C | Class | Class R6 | Class A | Class | Class R6 | ||||||||||||||||||||||||||
Shares |
Shares |
Shares |
Shares |
Shares |
Shares |
Shares |
Value |
|||||||||||||||||||||||||
Six months ended 5/30/2020 |
4,893 | 2,448 | 51,430 | 3,811 | 947 | 9,399 | 51,397 | $ | 3,943,614 | |||||||||||||||||||||||
Year ended 11/30/2019 |
43,988 | 3,061 | 380,736 | 17,034 | 3,175 | 57,579 | 380,602 | 27,557,018 |
32
5. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $220,000,000 revolving line of credit intended 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 0.15%, which was allocated across the Participants based on a weighted average of the respective net assets of each Participant. 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. 4, 2019.
On Nov. 4, 2019, the Participants entered into an amendment to the agreement for a $250,000,000 revolving line of credit. The revolving line of credit available was increased to $275,000,000 on May 6, 2020. The revolving 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 expires on Nov. 2, 2020.
The Fund had no amounts outstanding as of May 31, 2020, or at any time during the period then ended.
6. Securities Lending
The Fund, along with other funds in the Delaware Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with The Bank of New York Mellon (BNY Mellon). At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (1) 102% with respect to US securities and foreign securities that are denominated and payable in US dollars; and (2) 105% with respect to foreign securities. With respect to each loan, if on any business day, the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day, which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon the request of the borrower, BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security on any particular day, may be more or less than the value of the security on loan. The collateral percentage with respect to the market value of the loaned security is determined by the security lending agent.
Cash collateral received by each fund of the Trust is generally invested in a series of individual separate accounts, each corresponding to a fund. The investment guidelines permit each separate account to hold certain securities that would be considered eligible securities for a money market fund. Cash collateral received is generally invested in government securities; certain obligations issued by government sponsored enterprises; repurchase agreements collateralized by US Treasury securities; obligations issued by the central government of any Organization for Economic Cooperation and Development (OECD) country or its agencies, instrumentalities or establishments; obligations of supranational organizations; commercial paper, notes, bonds, and other debt obligations; certificates of
33
Delaware Small Cap Value Fund
6. Securities Lending (continued)
deposit, time deposits, and other bank obligations; and asset-backed securities. The Fund can also accept US government securities and letters of credit (non-cash collateral) in connection with securities loans.
In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the 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 Fund may incur investment losses as a result of investing securities lending collateral. This could occur if an investment in the collateral investment account defaulted or became impaired. Under those circumstances, the value of the Funds cash collateral account may be less than the amount the Fund would be required to return to the borrowers of the securities and the Fund would be required to make up for this shortfall.
During the six months ended May 31, 2020, the Fund had no securities out on loan.
7. Credit and Market Risk
The Fund invests in growth stocks (such as those in the financial services sector), which reflect projections of future earnings and revenue. These prices may rise or fall dramatically depending on whether those projections are met. These companies stock prices may be more volatile, particularly over the short term.
The Fund invests a significant portion of its assets in small companies and may be subject to certain risks associated with ownership of securities of such companies. Investments in small sized companies may be more volatile than investments in larger companies for a number of reasons, which include limited financial resources or a dependence on narrow product lines.
The Fund invests in REITs and is subject to the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the six months ended May 31, 2020. The Funds REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 15% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A promulgated under the Securities Act of 1933, as amended, and other securities which may not be readily marketable.
34
The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Board has delegated to DMC, 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, 2020, there were no Rule 144A securities held by the Fund.
8. 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.
9. Recent Accounting Pronouncements
In August 2018, the FASB issued an Accounting Standards Update (ASU), ASU 2018-13, which changes certain fair value measurement disclosure requirements. The ASU 2018-13, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for the timing of transfers between levels and the valuation process for Level 3 fair value measurements. The ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2019. At this time, Management is evaluating the implications of these changes on the financial statements.
10. Subsequent Events
Beginning in January 2020, global financial markets have experienced and may continue to experience significant volatility resulting from the spread of a novel coronavirus known as COVID-19. The outbreak of COVID-19 has resulted in travel and border restrictions, quarantines, supply chain disruptions, lower consumer demand and general market uncertainty. The effects of COVID-19 have and may continue to adversely affect the global economy, the economies of certain nations and individual issuers, all of which may negatively impact the Funds performance.
Management has determined that no other material events or transactions occurred subsequent to May 31, 2020, that would require recognition or disclosure in the Funds financial statements.
35
Other Fund information (Unaudited)
Delaware Small Cap Value Fund
Liquidity Risk Management Program
The Securities and Exchange Commission (the SEC) has adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule), which requires all open-end funds (other than money market funds) to adopt and implement a program reasonably designed to assess and manage the funds liquidity risk, defined as the risk that the fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors interests in the fund.
The Fund has adopted and implemented a liquidity risk management program in accordance with the Liquidity Rule (the Program). The Board has designated the Division Director of the US Operational Risk Group of Macquarie Asset Management as the Program Administrator for each Fund in the Trust.
As required by the Liquidity Rule, the Program includes policies and procedures that provide for: (1) assessment, management, and review (no less frequently than annually) of the Funds liquidity risk; (2) classification of each of the Funds portfolio holdings into one of four liquidity categories (Highly Liquid, Moderately Liquid, Less Liquid, and Illiquid); (3) for funds that do not primarily hold assets that are Highly Liquid, establishing and maintaining a minimum percentage of the Funds net assets in Highly Liquid investments (called a Highly Liquid Investment Minimum or HLIM); and (4) prohibiting the Funds acquisition of Illiquid investments if, immediately after the acquisition, the Fund would hold more than 15% of its net assets in Illiquid assets. The Program also requires reporting to the SEC (on a non-public basis) and to the Board if the Funds holdings of Illiquid assets exceed 15% of the Funds net assets. Funds with HLIMs must have procedures for addressing HLIM shortfalls, including reporting to the Board and, with respect to HLIM shortfalls lasting more than seven consecutive calendar days, reporting to the SEC (on a non-public basis).
In assessing and managing the Funds liquidity risk, the Program Administrator considers, as relevant, a variety of factors, including: (1) the Funds investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions; (2) short-term and long-term cash flow projections for the Fund during both normal and reasonably foreseeable stressed conditions; and (3) the Funds holdings of cash and cash equivalents and any borrowing arrangements. Classification of the Funds portfolio holdings in the four liquidity categories is based on the number of days it is reasonably expected to take to convert the investment to cash (for Highly Liquid and Moderately Liquid holdings) or to sell or dispose of the investment (for Less Liquid and Illiquid investments), in current market conditions without significantly changing the investments market value. The Fund primarily holds assets that are classified as Highly Liquid, and therefore is not required to establish an HLIM.
At a meeting of the Board held on May 19-21, 2020, the Program Administrator provided a written report to the Board addressing the Programs operation and assessing the adequacy and effectiveness of its implementation for the period from December 1, 2018 through March 31, 2020. The report concluded that the Program is appropriately designed and effectively implemented and that it meets the requirements of Rule 22e-4 and the Funds liquidity needs. The Funds HLIM is set at an appropriate level and the Fund complied with its HLIM at all times during the reporting period.
36
Board of trustees
|
||||||
Shawn K. Lytle President and Chief Executive Officer Delaware Funds ® by Macquarie Philadelphia, PA
Thomas L. Bennett Chairman of the Board Delaware Funds by Macquarie Private Investor Rosemont, PA
Jerome D. Abernathy Managing Member Stonebrook Capital Management, LLC Jersey City, NJ
|
Ann D. Borowiec Former Chief Executive Officer Private Wealth Management J.P. Morgan Chase & Co. New York, NY
Joseph W. Chow Former Executive Vice President State Street Corporation Boston, MA
John A. Fry President Drexel University Philadelphia, PA |
Lucinda S. Landreth Former Chief Investment Officer Assurant, Inc. New York, NY
Frances A. Sevilla-Sacasa Former Chief Executive Officer Banco Itaú International Miami, FL |
Thomas K. Whitford Former Vice Chairman PNC Financial Services Group Pittsburgh, PA
Christianna Wood Chief Executive Officer and President Gore Creek Capital, Ltd. Golden, CO
Janet L. Yeomans Former Vice President and Treasurer 3M Company St. Paul, MN | |||
Affiliated officers
|
||||||
David F. Connor | Daniel V. Geatens | Richard Salus | ||||
Senior Vice President, | Vice President and | Senior Vice President and | ||||
General Counsel, | Treasurer | Chief Financial Officer | ||||
and Secretary | Delaware Funds | Delaware Funds | ||||
Delaware Funds | by Macquarie | by Macquarie | ||||
by Macquarie | Philadelphia, PA | Philadelphia, PA | ||||
Philadelphia, PA |
This semiannual report is for the information of Delaware Small Cap Value Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware Fund fact sheet for the most recently completed calendar quarter. These documents are available at delawarefunds.com/literature.
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-PORT. The Funds Forms N-PORT, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities, are available without charge (i) upon request, by calling 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 Schedule of Investments included in the Funds most recent Form N-PORT are available without charge on the Funds website at delawarefunds.com/literature. The Funds Forms N-PORT 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 delawarefunds.com/proxy; and (ii) on the SECs website at sec.gov.
37
Delaware Funds® by Macquarie privacy practices notice
We are committed to protecting the privacy of our potential, current, and former customers. To provide the products and services you request, we must collect personal information about you. We do not sell your personal information to third parties. We collect your personal information and share it with third parties as necessary to provide you with the products or services you request and to administer your business with us. This notice describes our current privacy practices. While your relationship with us continues, we will update and send our privacy practices notice as required by law. We are committed to continuing to protect your personal information even after that relationship ends. You do not need to take any action because of this notice.
i This page is not part of the semiannual report.
This page is not part of the semiannual report. ii
Delaware Funds® by Macquarie privacy practices notice
iii This page is not part of the semiannual report.
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Delaware Funds® by Macquarie
1On April 6, 2019, Foresters Investment Management Company, Inc. (FIMCO), the investment adviser to the First Investors Funds, entered into an agreement with Macquarie Management Holdings, Inc. (MMHI), a leading global investment management company, whereby MMHI, on behalf of its affiliate Delaware Management Company (DMC), a series of Macquarie Investment Management Business Trust (Macquarie), would acquire FIMCOs asset management business (the Transaction). In connection with the Transaction, the Board of Trustees of the First Investors Trusts approved, pursuant to an Agreement and Plan of Reorganization (the Agreement), the transfer of all assets and liabilities of each First Investors Fund to a corresponding, newly formed fund (each, an Acquiring Fund, and collectively, the Acquiring Funds) in the Delaware Funds® by Macquarie family of funds (each, a Reorganization and together, the Reorganizations). Following the requisite approval of each Reorganization from shareholders of each First Investors Fund, each Acquiring Fund is managed by DMC and each Acquiring Fund has the same or substantially the same investment objective and the same or similar principal investment strategies and principal risks as the corresponding First Investors Fund. The Transaction closed on Oct. 4, 2019 (the Closing Date). Information, including without limitation historical holdings and performance information, relating to the Acquiring Funds for periods prior to the Closing Date has been provided by FIMCO and is attributable to the Acquired Funds.
Carefully consider a Funds investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in each Funds prospectus and, if available, its summary prospectus. A Delaware Funds by Macquarie prospectus may be obtained by visiting delawarefunds.com/literature or calling 800 523-1918. Investors should read the prospectus and, if available, the summary prospectus carefully before investing.
Investing involves risk, including the possible loss of principal.
The Funds are distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
v This page is not part of the semiannual report.
Fixed income funds
2Closed to certain new investors.
3On June 10, 2020, the Board of Trustees approved a proposal to liquidate and dissolve Delaware Global Real Estate Opportunities Fund (Fund) and to appoint a new portfolio manager. The liquidation and dissolution are expected to take effect on or about Aug. 13, 2020. The Fund closed to new investors on June 19, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until five (5) days before the liquidation date. Until the liquidation, shareholders of the Fund will have the opportunity to exchange their shares for shares of the same class of any other Delaware Funds by Macquarie fund. If a shareholder does not opt to exchange his or her shares prior to the liquidation, the shareholder will be paid a liquidating distribution by the Fund.
4Effective Aug. 20, 2019, the Funds name, investment objectives, and portfolio managers changed. The new portfolio managers intend to reposition the Funds investment portfolio in accordance with its current investment process. Because everyones tax situation is unique, you should consult your tax professional about federal, state, local, or foreign tax consequences before making an investment in the Fund.
5On May 20, 2020, the Board of Trustees unanimously voted and approved a proposal to liquidate and dissolve Delaware Government Cash Management Fund (Fund). The liquidation and dissolution are expected to take effect on or about Sept. 25, 2020. The Fund closed to new investors and all sales efforts ceased as of the close of business on Thursday, July 2, 2020. However, the Fund will continue to accept purchases from existing shareholders (including reinvested dividends or capital gains) until close of business Wednesday, Sept. 23, 2020. Until the liquidation, shareholders of the Fund will have the opportunity to exchange their shares for shares of the same class of any other Delaware Funds by Macquarie fund. Any exchange would be made at the current net asset value of the Fund and the selected Delaware Fund. The Funds shareholders would not incur front-end or contingent deferred sales charges upon these exchanges as the funds do not typically carry loads or sales charges.
This page is not part of the semiannual report. vi
Caring for your portfolio
Over a lifetime, things change. When they do, its important to ensure that your investments stay in tune with your personal situation.
vii This page is not part of the semiannual report.
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Contact information
Shareholder assistance by phone
800 523-1918, weekdays from 8:30am to
6:00pm Eastern time
For securities dealers and financial
institutions representatives only
800 362-7500
Regular mail
P.O. Box 9876
Providence, RI 02940-8076
Overnight courier service
4400 Computer Drive
Westborough, MA 01581-1722
Macquarie Investment Management 2005 Market Street Philadelphia, PA 19103-7094
Macquarie Asset Management (MAM) offers a diverse range of products including securities investment management, infrastructure and real asset management, and fund and equity-based structured products. Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. This includes the following investment advisers: Macquarie Investment Management Business Trust (MIMBT), Macquarie Funds Management Hong Kong Limited, Macquarie Investment Management Austria Kapitalanlage AG, Macquarie Investment Management Global Limited, Macquarie Investment Management Europe Limited, Macquarie Capital Investment Management LLC, and Macquarie Investment Management Europe S.A.
The Fund is distributed by Delaware Distributors, L.P. (DDLP), an affiliate of MIMBT and Macquarie Group Limited.
Other than MBL, none of the entities noted are authorized deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of these entities, unless noted otherwise. The Fund is governed by US laws and regulations.
(1228235) | ||
ix This page is not part of the semiannual report. | SA-021 22615 [7/20] | |
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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 period covered by the report to stockholders included herein that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits
(a) (1) Code of Ethics
Not applicable.
(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.
DELAWARE GROUP® EQUITY FUNDS V
SHAWN K. LYTLE | |
By: | Shawn K. Lytle |
Title: | President and Chief Executive Officer |
Date: | August 5, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SHAWN K. LYTLE | |
By: | Shawn K. Lytle |
Title: | President and Chief Executive Officer |
Date: | August 5, 2020 |
RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | August 5, 2020 |
EXHIBIT 99.CERT
CERTIFICATION
I, Shawn K. Lytle certify that: | |||||
1. | I have reviewed this report on Form N-CSR of Delaware Group® Equity Funds V; | ||||
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 registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s 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, 2020
SHAWN K. LYTLE | |
By: | Shawn K. Lytle |
Title: | President and Chief Executive Officer |
CERTIFICATION
I, Richard Salus, certify that: | |||||
1. | I have reviewed this report on Form N-CSR of Delaware Group® Equity Funds V; | ||||
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 registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s 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, 2020
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 officer’s 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, 2020
SHAWN K. LYTLE | |
By: | Shawn K. Lytle |
Title: | President and Chief Executive Officer |
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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