N-CSR 1 mimgefii3850661-ncsr.htm CERTIFIED SHAREHOLDER REPORT

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES

Investment Company Act file number:       811-00750
 
Exact name of registrant as specified in charter: Delaware Group® Equity Funds II
 
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
 
Name and address of agent for service: David F. Connor, Esq.
2005 Market Street
Philadelphia, PA 19103
 
Registrant’s telephone number, including area code: (800) 523-1918
 
Date of fiscal year end: November 30
 
Date of reporting period: November 30, 2020

Item 1. Reports to Stockholders

Annual report
US equity mutual fund
Delaware Value® Fund
November 30, 2020
Beginning on or about June 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of your Fund’s 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 Fund's investment objectives, risk factors, charges, and expenses before investing. This and other information can be found in the Fund's prospectus and its summary prospectus, which may be obtained by visiting 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 Value® Fund at delawarefunds.com/literature.
Manage your account online
•   Check your account balance and transactions
•  View statements and tax forms
•  Make purchases and redemptions
Visit delawarefunds.com/account-access.
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. 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, 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 Macquarie Bank Limited (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.
Table of contents
Unless otherwise noted, views expressed herein are current as of November 30, 2020, and subject to change for events occurring after such date.
The Fund is not FDIC insured and is not guaranteed. It is possible to lose the principal amount invested.
Advisory services provided by Delaware Management Company, a series of MIMBT, a US registered investment advisor.
All third-party marks cited are the property of their respective owners.
© 2021 Macquarie Management Holdings, Inc.
Portfolio management review
Delaware Value® Fund December 8, 2020 (Unaudited)
Performance preview (for the year ended November 30, 2020)
Delaware Value Fund (Institutional Class shares) 1-year return -0.68%
Delaware Value Fund (Class A shares) 1-year return -0.90%
Russell 1000® Value Index (benchmark) 1-year return +1.72%
Past performance does not guarantee future results.
For complete, annualized performance for Delaware Value Fund, please see the table on page 4. Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service fee.
The performance of Class A shares excludes the applicable sales charge. The performance of both Institutional Class shares and Class A shares reflects the reinvestment of all distributions.
Please see page 6 for a description of the index. Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.
Investment objective
The Fund seeks long-term capital appreciation.
Market review
During the Fund’s fiscal year, the COVID-19 outbreak turned into a global pandemic, causing severe economic and humanitarian disruptions. Governments moved to curtail human interaction, which interrupted commerce and daily life for billions of people. Job losses in the United States totaled 22.2 million during the height of
shelter-in-place orders in March and April, and the unemployment rate peaked at 14.7%. Central bankers and policymakers around the world responded to the pandemic-induced downturn by authorizing fiscal and monetary support programs worth trillions of dollars. In the US, the Federal Reserve implemented a range of support measures aimed at backstopping the financial markets and the economy, which led to a $3 trillion expansion in the size of the Fed’s balance sheet. By the end of the Fund’s fiscal year, the US economy had recouped 12.2 million jobs, and unemployment was down to 6.7%. (Sources: Bureau of Labor Statistics, Federal Reserve Bank.)
The pandemic and resulting government policy responses caused significant fluctuations in the stock market. After hitting a new all-time high in
As the end of the Fund’s fiscal year approached, in our opinion the stock market’s rise seemed driven more by momentum and speculation than by signs of lasting fundamental improvement in areas such as corporate earnings and economic activity. Once again, a key support for stocks was the Federal Reserve, which signaled that monetary policy would likely remain very accommodative for years to come. In this environment, we saw lingering uncertainties associated with the coronavirus pandemic and remained focused on companies with more defensible business models that, in our view, could navigate through more adverse market conditions.
    1
Portfolio management review
Delaware Value® Fund 
mid-February, the broad market S&P 500® Index plunged into bear market territory by declining 30%, the fastest drop of this magnitude in its history. The index then jumped 17% in late March – its biggest three-day gain since 1933 – when a massive fiscal stimulus package worked its way through US Congress. From that point, stocks continued to rally strongly, especially those of very large, technology-oriented growth companies as investors appeared to be unconcerned with their high valuations. In early September, the S&P 500 Index hit a new all-time high before modestly retreating amid mounting uncertainty about the US election and ongoing economic difficulties. Then, in the final month of the 12-month period, stocks recorded their strongest monthly gain in years as investors appeared to embrace promising news about COVID-19 vaccine developments, the results of the general election and the Fed’s reiteration of its commitment to keep short-term interest rates near zero for at least the next
several years.
Within the Fund
For the fiscal year ended November 30, 2020, Delaware Value Fund underperformed its benchmark, the Russell 1000 Value Index. The Fund’s Institutional Class shares declined -0.68%. The Fund’s Class A shares fell -0.90% at net asset value (NAV) and -6.61% at maximum offer price (both figures reflect all distributions reinvested). For the same period, the Fund’s benchmark gained 1.72%. For complete, annualized performance of Delaware Value Fund, please see the table on page 4.
Investments in the energy sector were the largest detractors from the Fund’s performance. Shares of exploration and production (E&P) companies Marathon Oil Corp. and Occidental Petroleum Corp., both of which are highly sensitive to fluctuations in oil prices, experienced significant stock-price declines when crude oil demand dropped significantly early in the pandemic. Given
our team’s view that demand for oil could remain weak for an extended period, and cash-flow generation at these businesses could remain depressed, we opted to sell these positions from the Fund during the fiscal year.
The Fund’s holdings in the industrials sector also resulted in relative underperformance. Aerospace and defense company Raytheon Technologies Corp. was the laggard in this group. The company formed in April when Raytheon Co. merged with United Technologies Corp. Raytheon Technologies’ commercial aerospace exposure has been a source of concern for investors during the downturn. The company expressed a conservative outlook for its free cash flow in 2020 and delayed its timeframe for an expected recovery in the aerospace industry. Meanwhile, the firm’s defense segment continued to post strong financial results with a significant increase in its business. As of November 30, Raytheon Technologies’ shares remained attractively valued, in the team’s view, and appeared to have priced in many challenges facing its business.
The Fund’s holding in multifamily housing real estate investment trust (REIT) Equity Residential was another notable detractor. Pandemic-related pressure on rent and occupancy levels challenged Equity Residential’s business in some of its core urban markets. Additionally, REITs in other more highly valued market areas that are less exposed to COVID-19 – such as storage, data centers, and cell towers – continued to garner investor interest. Despite the near-term challenges facing the multifamily housing space, we remain positive about Equity Residential’s prospects over the next three to five years. In our opinion, it has one of the strongest balance sheet and capital positions among its peers, and the stock is trading near an all-time low valuation. When the economy reopens more, we expect Equity Residential will see its fundamentals stabilize and eventually improve. Meanwhile, we believe the company’s balance sheet and diversified property portfolio should
 
2    
continue to provide support at current
valuation levels.
Investments in the information technology (IT) sector were the largest contributors to the Fund’s relative returns. Broadcom Inc., a leading provider of semiconductor and infrastructure software solutions, led the group. The company has seen relatively steady demand for many of its products and services, and it has benefited from several broad trends, including growing demand for servers, storage, mobility, and security. As of the end of the fiscal period, the team believes Broadcom has attractive cash flow dynamics, remaining upside potential in its stock, and an attractive dividend yield.
The Fund’s holdings in the consumer staples sector also contributed to relative performance. Conagra Brands Inc., a leading packaged-food company, was a solid contributor. Strength in demand for packaged food buoyed Conagra’s shares, which led to higher-than-expected organic sales growth. Conagra also made further progress in reducing the leverage it took on with its 2018 acquisition of Pinnacle Foods. The company also declared a large dividend increase when it announced earnings results for its most recent fiscal quarter.
The Fund’s holding in home improvement retailer Lowe’s Companies Inc. was another notable contributor. The company continued to benefit from ongoing strength in consumer spending on home improvements and stronger operational
execution stemming from CEO Marvin Ellison’s recent business transformation initiatives.
As the end of the Fund’s fiscal year approached, in our opinion the stock market’s rise seemed driven more by momentum and speculation than by signs of lasting fundamental improvement in areas such as corporate earnings and economic activity. Once again, a key support for stocks was the Fed, which signaled that monetary policy would likely remain very accommodative for years to come. In this environment, we saw lingering uncertainties associated with the coronavirus pandemic and remained focused on companies with more defensible business models that, in our view, could navigate through more adverse
market conditions.
The Fund’s positioning, in our opinion, remained somewhat defensive. For example, there were underweights in the energy and financials sectors, an overweight in healthcare, and less cyclical (less economically sensitive) positioning in the consumer discretionary and IT sectors. Even as the Fund lagged the benchmark during the fiscal period – especially in the last few months as investors rotated into more speculative stocks – we were not inclined to chase the rally because we did not believe long-term fundamentals justified these stocks’ leadership. As of the end of the fiscal year, we continued to emphasize higher quality, undervalued investment opportunities that we believed had the potential to contribute to strong long-term performance.
    3
Performance summary
Delaware Value® Fund November 30, 2020 (Unaudited)
The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting delawarefunds.com/performance.
Fund and benchmark performance1,2 Average annual total returns through November 30, 2020
  1 year 5 year 10 year Lifetime
Class A (Est. September 15, 1998)        
Excluding sales charge -0.90% +7.36% +11.16% +7.33%
Including sales charge -6.61% +6.09% +10.50% +7.04%
Class C (Est. May 1, 2002)        
Excluding sales charge -1.68% +6.56% +10.33% +6.47%
Including sales charge -2.62% +6.56% +10.33% +6.47%
Class R (Est. September 1, 2005)        
Excluding sales charge -1.16% +7.09% +10.88% +7.16%
Including sales charge -1.16% +7.09% +10.88% +7.16%
Institutional Class (Est. September 15, 1998)        
Excluding sales charge -0.68% +7.62% +11.44% +7.55%
Including sales charge -0.68% +7.62% +11.44% +7.55%
Class R6 (Est. May 2, 2016)        
Excluding sales charge -0.57% — — +7.48%
Including sales charge -0.57% — — +7.48%
Russell 1000 Value Index +1.72% +8.44% +10.93% +7.36%*
*The benchmark lifetime return is for Institutional Class share comparison only and is calculated using the last business day in the month of the Fund’s Institutional Class inception date.
1Returns reflect the reinvestment of all distributions and are presented both with and without the applicable sales charges described below. Returns do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.
Expense limitations were in effect for certain classes during some or all of the periods shown in the “Fund and benchmark performance” table. Expenses for each class are listed on the “Fund expense ratios” table on page 5. Performance would have been lower had expense limitations not been in effect.
Institutional Class shares are not subject to a sales charge and are offered for sale exclusively to certain eligible investors. In addition, Institutional Class shares pay no distribution and service (12b-1) fee.
Class A shares are sold with a maximum front-end sales charge of 5.75%, and have an annual 12b-1 fee of 0.25% of average daily net assets. The Board has adopted a formula for calculating 12b-1 plan fees for the Fund’s Class A shares. The Fund’s Class A shares are currently subject to a blended 12b-1 fee equal to the sum of: (i) 0.10% of average daily net assets representing shares
 
4
acquired prior to May 2, 1994, and (ii) 0.25% of average daily net assets representing shares acquired on or after May 2, 1994. All Class A shares currently bear 12b-1 fees at the same rate, the blended rate, currently 0.25% of average daily net assets, based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board. Performance for Class A shares, excluding sales charges, assumes that no front-end sales charge applied.
Class C shares are sold with a contingent deferred sales charge of 1.00% if redeemed during the first 12 months. They are also subject to an annual 12b-1 fee of 1.00% of average daily net assets. Performance for Class C shares, excluding sales charges, assumes either that contingent deferred sales charges did not apply or that the investment was not redeemed.
Class R shares are available only for certain retirement plan products. They are sold without a
sales charge and have an annual 12b-1 fee of 0.50% of average daily net assets.
Class R6 shares are available only to certain 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. Class R6 shares pay no 12b-1 fee.
Risk is increased in a concentrated portfolio since it holds a limited number of securities with each investment having a greater effect on the overall performance.
Diversification may not protect against market risk.
The disruptions caused by natural disasters, pandemics, or similar events could prevent the Fund from executing advantageous investment decisions in a timely manner and could negatively impact the Fund’s ability to achieve its investment objective and the value of the Fund’s investments.
2The Fund’s expense ratios, as described in the most recent prospectus, are disclosed in the following “Fund expense ratios” table. Please see the “Financial highlights” section in this report for the most recent expense ratios.
Fund expense ratios Class A Class C Class R Institutional Class Class R6
Total annual operating expenses (without fee waivers) 0.93% 1.68% 1.18% 0.68% 0.58%
Net expenses (including fee waivers, if any) 0.93% 1.68% 1.18% 0.68% 0.58%
Type of waiver n/a n/a n/a n/a n/a
    5
Performance summary
Delaware Value® Fund 
Performance of a $10,000 investment1
Average annual total returns from November 30, 2010 through November 30, 2020
For period beginning November 30, 2010 through November 30, 2020 Starting value Ending value
Delaware Value Fund — Institutional Class shares $10,000 $29,547
Russell 1000 Value Index $10,000 $28,208
Delaware Value Fund — Class A shares $9,425 $27,153
1The “Performance of a $10,000 investment” graph assumes $10,000 invested in Institutional Class and Class A shares of the Fund on November 30, 2010, and includes the effect of a 5.75% front-end sales charge (for Class A shares) and the reinvestment of all distributions. The graph does not reflect the deduction of taxes the shareholders would pay on Fund distributions or redemptions of Fund shares. Expense limitations were in effect for some or all of the periods shown. Performance would have been lower had expense limitations not been in effect. Expenses are listed in the “Fund expense ratios” table on page 5. Please note additional details on pages 4
through 7.
The graph also assumes $10,000 invested
in the Russell 1000 Value Index as of
November 30, 2010. The Russell 1000 Value Index measures the performance of the large-cap value segment of the US equity universe. It includes
those Russell 1000 companies with lower price-to-book ratios and lower forecasted
growth values.
The S&P 500 Index, mentioned on page 1, measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the US
stock market.
Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.
Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index. Past performance is not a guarantee of future results.
Performance of other Fund classes will vary due to different charges and expenses.
 
6    
  Nasdaq symbols CUSIPs
Class A DDVAX 24610C881
Class C DDVCX 24610C865
Class R DDVRX 245907860
Institutional Class DDVIX  24610C857
Class R6 DDZRX 24610C840
    7
Disclosure of Fund expenses
For the six-month period from June 1, 2020 to November 30, 2020 (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, reinvested dividends, or other distributions; redemption fees; and exchange fees; and (2) ongoing costs, including management fees; distribution and 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 June 1, 2020 to November 30, 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 Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and
do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second section of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The Fund's expenses shown in the table assume reinvestment of all dividends and distributions.
8
Delaware Value® Fund
Expense analysis of an investment of $1,000
  Beginning
Account Value
6/1/20 		Ending
Account Value
11/30/20 		Annualized
Expense Ratio 		Expenses
Paid During Period
6/1/20 to 11/30/20*
Actual Fund return†
Class A $1,000.00 $1,121.10 0.93% $4.93
Class C 1,000.00 1,116.90 1.68% 8.89
Class R 1,000.00 1,119.70 1.18% 6.25
Institutional Class 1,000.00 1,122.50 0.68% 3.61
Class R6 1,000.00 1,123.10 0.58% 3.08
Hypothetical 5% return (5% return before expenses)
Class A $1,000.00 $1,020.35 0.93% $4.70
Class C 1,000.00 1,016.60 1.68% 8.47
Class R 1,000.00 1,019.10 1.18% 5.96
Institutional Class 1,000.00 1,021.60 0.68% 3.44
Class R6 1,000.00 1,022.10 0.58% 2.93
*“Expenses Paid During Period” are equal to the Fund’s 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 Fund's 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.
    9
Security type / sector allocation and top 10
equity holdings
Delaware Value® Fund As of November 30, 2020 (Unaudited)
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may represent the investment manager’s internal sector classifications.
Security type / sector Percentage of net assets
Common Stock 98.50%
Communication Services 11.70%
Consumer Discretionary 6.08%
Consumer Staples 8.97%
Energy 2.88%
Financials 12.50%
Healthcare 17.55%
Industrials 12.07%
Information Technology 17.90%
Materials 3.08%
Real Estate 2.81%
Utilities 2.96%
Short-Term Investments 1.40%
Total Value of Securities 99.90%
Receivables and Other Assets Net of Liabilities 0.10%
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
Dollar Tree 3.40%
Raytheon Technologies 3.17%
Walt Disney 3.15%
Cognizant Technology Solutions Class A 3.15%
Broadcom 3.14%
Caterpillar 3.12%
Allstate 3.10%
DuPont de Nemours 3.08%
American International Group 3.06%
Comcast Class A 3.06%
10
Schedule of investments
Delaware Value® Fund November 30, 2020
    Number of shares Value (US $)
Common Stock — 98.50%
Communication Services — 11.70%
AT&T    9,584,508 $275,554,605
Comcast Class A    6,342,147 318,629,465
Verizon Communications    4,915,733 296,959,431
Walt Disney    2,218,746 328,396,595
  1,219,540,096
Consumer Discretionary — 6.08%
Dollar Tree †   3,244,958 354,479,212
Lowe's    1,789,566 278,850,174
  633,329,386
Consumer Staples — 8.97%
Archer-Daniels-Midland    6,266,337 311,875,593
Conagra Brands    8,465,224 309,488,589
Mondelez International Class A    5,456,660 313,485,117
  934,849,299
Energy — 2.88%
ConocoPhillips    7,583,623 300,008,126
  300,008,126
Financials — 12.50%
Allstate    3,152,682 322,677,003
American International Group    8,311,300 319,486,372
Bank of New York Mellon    1,517,580 59,367,729
Discover Financial Services    3,859,543 293,981,390
Truist Financial    6,633,923 307,946,706
  1,303,459,200
Healthcare — 17.55%
Cardinal Health    5,792,444 316,209,518
Cigna    1,502,364 314,204,407
CVS Health    4,595,402 311,522,302
Johnson & Johnson    2,033,412 294,194,048
Merck & Co.    3,804,142 305,814,975
Pfizer    4,114,982 157,644,961
Viatris †   7,756,522 130,464,700
  1,830,054,911
Industrials — 12.07%
Caterpillar    1,872,692 325,080,604
Honeywell International    1,533,106 312,630,976
Northrop Grumman    958,562 289,734,950
Raytheon Technologies    4,607,807 330,471,918
  1,257,918,448
    11
Schedule of investments
Delaware Value® Fund 
    Number of shares Value (US $)
Common Stock (continued)
Information Technology — 17.90%
Broadcom    814,700 $327,167,226
Cisco Systems    7,107,147 305,749,464
Cognizant Technology Solutions Class A    4,200,441 328,180,455
Intel    6,038,329 291,953,207
Motorola Solutions    1,827,100 313,402,463
Oracle    5,194,200 299,809,224
  1,866,262,039
Materials — 3.08%
DuPont de Nemours    5,067,007 321,450,924
  321,450,924
Real Estate — 2.81%
Equity Residential    5,064,100 293,312,672
  293,312,672
Utilities — 2.96%
Edison International    5,034,800 308,935,328
  308,935,328
Total Common Stock (cost $7,261,213,624) 10,269,120,429
Short-Term Investments — 1.40%
Money Market Mutual Funds — 1.40%
BlackRock FedFund – Institutional Shares (seven-day effective yield 0.00%)   36,481,858 36,481,858
Fidelity Investments Money Market Government Portfolio – Class I (seven-day effective yield 0.01%)   36,481,858 36,481,858
GS Financial Square Government Fund – Institutional Shares (seven-day effective yield 0.01%)   36,481,859 36,481,859
Morgan Stanley Government Portfolio – Institutional Share Class (seven-day effective yield 0.00%)   36,481,858 36,481,858
Total Short-Term Investments (cost $145,927,433) 145,927,433
Total Value of Securities—99.90%
(cost $7,407,141,057) 		    $10,415,047,862
† Non-income producing security.
Summary of abbreviations:
GS – Goldman Sachs
See accompanying notes, which are an integral part of the financial statements.
12    
Statement of assets and liabilities
Delaware Value® Fund November 30, 2020
Assets:  
Investments, at value* $10,415,047,862
Receivable for securities sold 37,219,450
Dividends receivable 27,451,965
Receivable for fund shares sold 12,918,610
Total Assets 10,492,637,887
Liabilities:  
Due to custodian 10
Payable for securities purchased 33,720,826
Payable for fund shares redeemed 25,744,381
Investment management fees payable to affiliates 4,350,277
Other accrued expenses 2,363,023
Distribution fees payable to affiliates 589,052
Dividend disbursing and transfer agent fees and expenses payable to affiliates 75,210
Trustees' fees and expenses payable to affiliates 69,984
Accounting and administration expenses payable to affiliates 28,643
Legal fees payable to affiliates 14,150
Reports and statements to shareholders expenses payable to affiliates 10,080
Total Liabilities 66,965,636
Total Net Assets $10,425,672,251
Net Assets Consist of:  
Paid-in capital $7,338,896,204
Total distributable earnings (loss) 3,086,776,047
Total Net Assets $10,425,672,251
    13
Statement of assets and liabilities
Delaware Value® Fund 
Net Asset Value  
Class A:  
Net assets $1,505,191,420
Shares of beneficial interest outstanding, unlimited authorization, no par 71,188,215
Net asset value per share $21.14
Sales charge 5.75%
Offering price per share, equal to net asset value per share / (1 - sales charge) $22.43
Class C:  
Net assets $319,179,989
Shares of beneficial interest outstanding, unlimited authorization, no par 15,124,066
Net asset value per share $21.10
Class R:  
Net assets $52,839,468
Shares of beneficial interest outstanding, unlimited authorization, no par 2,500,659
Net asset value per share $21.13
Institutional Class:  
Net assets $7,427,158,945
Shares of beneficial interest outstanding, unlimited authorization, no par 351,278,779
Net asset value per share $21.14
Class R6:  
Net assets $1,121,302,429
Shares of beneficial interest outstanding, unlimited authorization, no par 53,034,605
Net asset value per share $21.14
*Investments, at cost 		$7,407,141,057
See accompanying notes, which are an integral part of the financial statements.
14    
Statement of operations
Delaware Value® Fund Year ended November 30, 2020
Investment Income:  
Dividends $322,654,082
Expenses:  
Management fees 58,444,914
Distribution expenses — Class A 4,020,126
Distribution expenses — Class C 4,026,508
Distribution expenses — Class R 297,416
Dividend disbursing and transfer agent fees and expenses 12,729,161
Accounting and administration expenses 1,895,306
Reports and statements to shareholders expenses 899,234
Trustees’ fees and expenses 664,917
Legal fees 610,623
Custodian fees 407,439
Registration fees 211,485
Audit and tax fees 35,760
Other 315,066
  84,557,955
Less expenses paid indirectly (15,484)
Total operating expenses 84,542,471
Net Investment Income 238,111,611
Net Realized and Unrealized Gain:  
Net realized gain on investments 69,465,897
Net change in unrealized appreciation (depreciation) of investments (872,158,900)
Net Realized and Unrealized Loss (802,693,003)
Net Decrease in Net Assets Resulting from Operations $(564,581,392)
See accompanying notes, which are an integral part of the financial statements.
    15
Statements of changes in net assets
Delaware Value® Fund
  Year ended
  11/30/20   11/30/19
Increase (Decrease) in Net Assets from Operations:      
Net investment income $238,111,611   $262,543,323
Net realized gain 69,465,897   439,173,865
Net change in unrealized appreciation (depreciation) (872,158,900)   313,774,114
Net increase (decrease) in net assets resulting from operations (564,581,392)   1,015,491,302
Dividends and Distributions to Shareholders from:      
Distributable earnings:      
Class A (90,690,637)   (117,124,328)
Class C (20,807,776)   (26,349,930)
Class R (3,428,708)   (5,869,279)
Institutional Class (509,251,688)   (612,263,565)
Class R6 (57,620,740)   (37,841,532)
  (681,799,549)   (799,448,634)
Capital Share Transactions:      
Proceeds from shares sold:      
Class A 270,232,035   345,550,097
Class C 23,000,041   92,604,049
Class R 7,301,395   20,655,518
Institutional Class 2,051,438,936   3,466,134,595
Class R6 324,407,162   733,412,953
Net asset value of shares issued upon reinvestment of dividends and distributions:      
Class A 87,274,794   113,220,748
Class C 19,761,795   25,020,804
Class R 3,424,905   5,846,466
Institutional Class 473,598,323   564,797,086
Class R6 46,874,376   36,004,457
  3,307,313,762   5,403,246,773
16
  Year ended
  11/30/20   11/30/19
Capital Share Transactions (continued):      
Cost of shares redeemed:      
Class A $(708,156,064)   $(614,597,628)
Class C (215,256,245)   (127,966,345)
Class R (32,973,642)   (61,111,408)
Institutional Class (5,146,040,267)   (3,569,942,665)
Class R6 (349,030,222)   (215,611,209)
  (6,451,456,440)   (4,589,229,255)
Increase (decrease) in net assets derived from capital share transactions (3,144,142,678)   814,017,518
Net Increase (Decrease) in Net Assets (4,390,523,619)   1,030,060,186
Net Assets:      
Beginning of year 14,816,195,870   13,786,135,684
End of year $10,425,672,251   $14,816,195,870
See accompanying notes, which are an integral part of the financial statements.
    17
Financial highlights
Delaware Value® Fund Class A
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income1
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 return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of net investment income to average net assets
Portfolio turnover
1 The average shares outstanding method has been applied for per share information.
2 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.
3 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    
Year ended
11/30/20   11/30/19   11/30/18   11/30/17   11/30/16
$22.44   $22.29   $21.63   $19.56   $18.15
 
                 
0.38   0.36   0.32   0.29   0.30
(0.63)   1.02   1.19   2.23   1.65
(0.25)   1.38   1.51   2.52   1.95
 
                 
(0.38)   (0.36)   (0.33)   (0.29)   (0.30)
(0.67)   (0.87)   (0.52)   (0.16)   (0.24)
(1.05)   (1.23)   (0.85)   (0.45)   (0.54)
 
$21.14   $22.44   $22.29   $21.63   $19.56
 
(0.90%)   7.09%   7.10%   13.05%   11.02%
 
                 
$1,505,191   $1,992,320   $2,135,717   $2,392,927   $3,928,981
0.93%   0.93%   0.93%   0.95%   0.97%
1.93%   1.68%   1.44%   1.43%   1.64%
25%   16%   20%   16%   9%
19    
Financial highlights
Delaware Value® Fund Class C 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income1
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 return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of net investment income to average net assets
Portfolio turnover
1 The average shares outstanding method has been applied for per share information.
2 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.
3 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    
Year ended
11/30/20   11/30/19   11/30/18   11/30/17   11/30/16
$22.38   $22.23   $21.57   $19.50   $18.10
 
                 
0.23   0.20   0.15   0.14   0.17
(0.62)   1.01   1.18   2.23   1.63
(0.39)   1.21   1.33   2.37   1.80
 
                 
(0.22)   (0.19)   (0.15)   (0.14)   (0.16)
(0.67)   (0.87)   (0.52)   (0.16)   (0.24)
(0.89)   (1.06)   (0.67)   (0.30)   (0.40)
 
$21.10   $22.38   $22.23   $21.57   $19.50
 
(1.68%)   6.29%   6.29%   12.26%   10.18%
 
                 
$319,180   $542,875   $545,157   $607,974   $818,879
1.68%   1.68%   1.68%   1.70%   1.72%
1.18%   0.93%   0.69%   0.68%   0.89%
25%   16%   20%   16%   9%
21    
Financial highlights
Delaware Value® Fund Class R 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income1
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 return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of net investment income to average net assets
Portfolio turnover
1 The average shares outstanding method has been applied for per share information.
2 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.
3 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    
Year ended
11/30/20   11/30/19   11/30/18   11/30/17   11/30/16
$22.43   $22.27   $21.61   $19.54   $18.14
 
                 
0.33   0.30   0.26   0.24   0.26
(0.62)   1.03   1.19   2.23   1.63
(0.29)   1.33   1.45   2.47   1.89
 
                 
(0.34)   (0.30)   (0.27)   (0.24)   (0.25)
(0.67)   (0.87)   (0.52)   (0.16)   (0.24)
(1.01)   (1.17)   (0.79)   (0.40)   (0.49)
 
$21.13   $22.43   $22.27   $21.61   $19.54
 
(1.16%)   6.85%   6.82%   12.78%   10.70%
 
                 
$52,840   $81,159   $116,330   $170,221   $184,004
1.18%   1.18%   1.18%   1.20%   1.22%
1.68%   1.43%   1.19%   1.18%   1.39%
25%   16%   20%   16%   9%
23    
Financial highlights
Delaware Value® Fund Institutional Class 
Selected data for each share of the Fund outstanding throughout each period were as follows:
 
 
Net asset value, beginning of period
 
Income (loss) from investment operations:
Net investment income1
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 return2
 
Ratios and supplemental data:
Net assets, end of period (000 omitted)
Ratio of expenses to average net assets3
Ratio of net investment income to average net assets
Portfolio turnover
1 The average shares outstanding method has been applied for per share information.
2 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.
3 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.
24    
Year ended
11/30/20   11/30/19   11/30/18   11/30/17   11/30/16
$22.45   $22.30   $21.64   $19.56   $18.16
 
                 
0.43   0.41   0.37   0.34   0.35
(0.64)   1.02   1.19   2.23   1.63
(0.21)   1.43   1.56   2.57   1.98
 
                 
(0.43)   (0.41)   (0.38)   (0.33)   (0.34)
(0.67)   (0.87)   (0.52)   (0.16)   (0.24)
(1.10)   (1.28)   (0.90)   (0.49)   (0.58)
 
$21.14   $22.45   $22.30   $21.64   $19.56
 
(0.68%)   7.36%   7.36%   13.38%   11.23%
 
                 
$7,427,159   $11,037,713   $10,406,840   $9,242,253   $8,870,934
0.68%   0.68%   0.68%   0.70%   0.72%
2.18%   1.93%   1.69%   1.68%   1.89%
25%   16%   20%   16%   9%
25    
Financial highlights
Delaware 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 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 Date of commencement of operations; ratios have been annualized and total return has not been annualized.
2 The average shares outstanding method has been applied for per share information.
3 Total 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.
5 Portfolio turnover is representative of the Fund for the entire period.
See accompanying notes, which are an integral part of the financial statements.
26    
Year ended   5/2/161
to
11/30/16
11/30/20   11/30/19   11/30/18   11/30/17  
$22.45   $22.30   $21.64   $19.57   $18.49
 
                 
0.45   0.44   0.39   0.36   0.22
(0.64)   1.01   1.19   2.23   1.04
(0.19)   1.45   1.58   2.59   1.26
 
                 
(0.45)   (0.43)   (0.40)   (0.36)   (0.18)
(0.67)   (0.87)   (0.52)   (0.16)   —
(1.12)   (1.30)   (0.92)   (0.52)   (0.18)
 
$21.14   $22.45   $22.30   $21.64   $19.57
 
(0.57%)   7.48%   7.46%   13.45%   6.83%
 
                 
$1,121,302   $1,162,129   $582,092   $276,328   $4,650
0.58%   0.58%   0.58%   0.60%   0.62%
2.28%   2.03%   1.79%   1.78%   2.01%
25%   16%   20%   16%   9%5
27    
Notes to financial statements
Delaware Value® Fund November 30, 2020
Delaware Group® Equity Funds II (Trust) is organized as a Delaware statutory trust and offers one series: Delaware Value Fund (Fund). The Trust is an open-end investment company. The Fund is considered diversified under the Investment Company Act of 1940, as amended, and offers Class A, Class 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. US government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. 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 direction of the Trust’s Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. 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 Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-
than-not” threshold are recorded as a tax benefit or expense in the current year. Management has
analyzed the Fund’s tax positions taken or expected to be taken on the Fund’s federal income tax returns through the year ended November 30, 2020 and for all open tax years (years ended
November 30, 2017–November 30, 2019), and has concluded that no provision for federal income tax is
28    
required in the Fund’s 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 year ended November 30, 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 will not be allocated any expenses related to service fees, sub-accounting fees, and/or sub-transfer agency fees paid to brokers, dealers, or other 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. The Fund declares and pays dividends from net investment income quarterly 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 year ended November 30, 2020, the Fund earned $9,620 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 year ended November 30, 2020, the Fund earned $5,864 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 0.65% on
    29
Notes to financial statements
Delaware Value® Fund 
2. Investment Management, Administration Agreements, and Other Transactions with Affiliates 
(continued)
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 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 its behalf. 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, 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, DIFSC’s 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 year ended November 30, 2020, the Fund was charged $388,927 for these services.
DIFSC is also the transfer agent and dividend disbursing agent of the Fund. For these services, DIFSC’s 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 year ended November 30, 2020, the Fund was charged $1,039,359 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 and Class R6 shares do not pay 12b-1 fees. The Board has adopted a formula for calculating 12b-1 fees for the Fund’s Class A shares. The total 12b-1 fees to be paid by Class A shareholders of the Fund will be the sum of (1) 0.10% of the average daily net assets representing shares that were acquired prior to May 2, 1994 and (2) 0.25% of the average daily net assets representing shares that were acquired on or after May 2, 1994. All Class A shareholders will bear 12b-1 fees at the
30    
same blended rate, currently 0.25% of average daily net assets, based upon the allocation of the rates described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board.
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 year ended November 30, 2020, the Fund was charged $328,040 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 year ended November 30, 2020, DDLP earned $66,872 for commissions on sales of the Fund’s Class A shares. For the year ended November 30, 2020, DDLP received gross CDSC commissions of $24,326 and $33,749 on redemptions of the Fund’s Class A and Class C shares, respectively, and these commissions were entirely used to offset upfront commissions previously paid by DDLP to broker/dealers on sales of those shares.
Trustees’ fees include expenses accrued by the Fund for each Trustee’s retainer and meeting fees. Certain officers of DMC, 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 year ended November 30, 2020, the Fund made purchases and sales of investment securities other than short-term investments as follows:
Purchases $2,759,558,345
Sales 6,338,404,696
The tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be the final tax cost basis adjustments, but approximates the tax basis unrealized gains and losses that may be realized and distributed to shareholders. At November 30, 2020, the cost and unrealized appreciation (depreciation) of investments for federal income tax purposes for the Fund were as follows:
Cost of investments $7,440,844,327
Aggregate unrealized appreciation of investments $3,052,592,008
Aggregate unrealized depreciation of investments (78,388,473)
Net unrealized appreciation of investments $2,974,203,535
    31
Notes to financial statements
Delaware Value® Fund 
3. Investments (continued)
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 entity’s 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 Fund's investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-level hierarchy of inputs is summarized as follows:
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 Fund's 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.
32    
The following table summarizes the valuation of the Fund's investments by fair value hierarchy levels as of November 30, 2020:
  Level 1
Securities  
Assets:  
Common Stock $10,269,120,429
Short-Term Investments 145,927,433
Total Value of Securities $10,415,047,862
During the year ended November 30, 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 Fund's 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 Fund's net assets. During the year ended November 30, 2020, there were no Level 3 investments.
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP. Additionally, distributions from net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the years ended November 30, 2020 and 2019 was as follows:
  Year ended
  11/30/20   11/30/19
Ordinary income $271,849,602   $292,501,173
Long-term capital gains 409,949,947   506,947,461
Total $681,799,549   $799,448,634
5. Components of Net Assets on a Tax Basis
As of November 30, 2020, the components of net assets on a tax basis were as follows:
Shares of beneficial interest $7,338,896,204
Undistributed ordinary income 39,075,435
Undistributed long-term capital gains 73,497,077
Unrealized appreciation of investments 2,974,203,535
Net assets $10,425,672,251
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales.
    33
Notes to financial statements
Delaware Value® Fund 
5. Components of Net Assets on a Tax Basis (continued)
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Results of operations and net assets were not affected by these reclassifications. For the year ended November 30, 2020, the Fund had no reclassifications.
6. Capital Shares
Transactions in capital shares were as follows:
  Year ended
  11/30/20   11/30/19
Shares sold:
Class A 14,074,024   16,275,817
Class C 1,160,200   4,446,572
Class R 377,038   995,164
Institutional Class 106,416,654   163,725,366
Class R6 17,018,763   33,953,996
Shares issued upon reinvestment of dividends and distributions:
Class A 4,230,831   5,807,783
Class C 937,235   1,296,289
Class R 164,612   301,718
Institutional Class 22,972,530   28,829,825
Class R6 2,296,394   1,829,053
  169,648,281   257,461,583
Shares redeemed:
Class A (35,881,362)   (29,125,002)
Class C (11,231,247)   (6,011,964)
Class R (1,659,236)   (2,901,315)
Institutional Class (269,777,829)   (167,587,844)
Class R6 (18,046,940)   (10,118,594)
  (336,596,614)   (215,744,719)
Net increase (decrease) (166,948,333)   41,716,864
34    
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 years ended November 30, 2020 and 2019, the Fund had the following exchange transactions:
    Exchange Redemptions   Exchange Subscriptions    
    Class A
Shares 		  Class C
Shares 		  Institutional
Class
Shares 		  Class R6
Shares 		  Class A
Shares 		  Institutional
Class
Shares 		  Class R6
Shares 		Value  
Year ended  
11/30/20   208,406   126,105   234,341   15,157   68,124   281,354   234,341 $11,666,097  
Year ended  
11/30/19   282,921   82,800   9,685,519   6,734   24,120   351,714   9,685,782 217,219,295  
7. Line of Credit
The Fund, along with certain other funds in the Delaware Funds (Participants), was a participant in a $250,000,000 revolving line of credit (Agreement) intended to be used for temporary or emergency purposes as an additional source of liquidity to fund redemptions of investor shares. The Agreement was increased to $275,000,000 on May 6, 2020. 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 November 2, 2020.
On November 2, 2020, the Fund, along with the other Participants entered into an amendment to the Agreement for an amount of $225,000,000 to be used as described above. It operates in substantially the same manner as the original Agreement with the addition of an upfront fee of 0.05%, which was allocated across the Participants. The line of credit available under the agreement expires on November 1, 2021.
The Fund had no amounts outstanding as of November 30, 2020, or at any time during the year
then ended.
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
    35
Notes to financial statements
Delaware Value® Fund 
8. Securities Lending (continued)
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 deposit, time deposits, and other bank obligations; and asset-backed securities. A 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 Fund’s 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 year ended November 30, 2020, the Fund had no securities out on loan.
36    
9. Credit and Market Risk
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 Fund’s performance.
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 Fund’s limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 15% limit on investments in illiquid securities. As of November 30, 2020, there were no Rule 144A securities held by the Fund.
10. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Fund's maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund's existing contracts and expects the risk of loss to be remote.
11. Recent Accounting Pronouncements
In August 2018, FASB issued an Accounting Standards Update (ASU), ASU 2018-13, which changes certain fair value measurement disclosure requirements. 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. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. At this time, Management is evaluating the implications of these changes on the financial statements.
12. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to November 30, 2020, that would require recognition or disclosure in the Fund's financial statements.
    37
Report of independent registered public accounting firm
To the Board of Trustees of Delaware Group® Equity Funds II and Shareholders of
Delaware Value® Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Delaware Value® Fund (constituting Delaware Group® Equity Funds II, referred to hereafter as the “Fund”) as of November 30, 2020, the related statement of operations for the year ended November 30, 2020, the statements of changes in net assets for each of the two years in the period ended November 30, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of November 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended November 30, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of November 30, 2020 by correspondence with the custodian, transfer agents and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
January 21, 2021
We have served as the auditor of one or more investment companies in Delaware Funds® by Macquarie since 2010.
38
Other Fund information (Unaudited)
Delaware Value® Fund
Tax Information
The information set forth below is for the Fund’s fiscal year as required by federal income tax laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of the Fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please consult your tax advisor for proper treatment of this information.
All disclosures are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring reporting, it is the intention of the Fund to report the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
For the fiscal year ended November 30, 2020, the Fund reports distributions paid during the year as follows:
(A) Long-Term Capital Gain Distributions (Tax Basis) 60.13%
(B) Ordinary Income Distributions (Tax Basis)* 39.87%
Total Distributions (Tax Basis) 100.00%
(C) Qualified Dividends1 100.00%
(A) and (B) are based on a percentage of the Fund’s total distributions.
(C) is based on the Fund’s ordinary income distributions.
1Qualified dividends represent dividends which qualify for the corporate dividends received deduction.
*For the fiscal year ended November 30, 2020, certain dividends paid by the Fund may be subject to a maximum tax rate of 20%. The percentage of dividends paid by the Fund from ordinary income reported as qualified income is 100%. Complete information will be computed and reported in conjunction with your 2020 Form 1099-DIV.
Board consideration of Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund at a meeting held August 11-13, 2020
At a meeting held on August 11-13, 2020 (the “Annual Meeting”), the Board of Trustees (the “Board”), including a majority of disinterested or independent Trustees, approved the renewal of the Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund (the “Fund”). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies, and expenses, as well as information prepared specifically in connection with the renewal of the investment advisory and sub-advisory contracts. Information furnished specifically in connection with the renewal of the Investment Management Agreement with Delaware Management Company (“DMC”), a series of Macquarie Investment Management Business Trust (“MIMBT”) and the Sub-Advisory Agreements with Macquarie Investment Management Global Limited (“MIMGL”) and Macquarie Funds Management Hong Kong Limited (“MFMHK”) (the “Sub-Advisers”), included materials provided by DMC and its affiliates (collectively, “Macquarie Investment Management”) concerning, among other things, the nature, extent, and quality of services provided to the Fund; the costs of such services to the Fund; economies of scale; and the investment
    39
Other Fund information (Unaudited)
Delaware Value® Fund 
Board consideration of Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund at a meeting held August 11-13, 2020 (continued)
manager’s financial condition and profitability. In addition, in connection with the Annual Meeting, materials were provided to the Trustees in May 2020, including reports provided by Broadridge Financial Solutions (“Broadridge”). The Broadridge reports compared the Fund’s investment performance and expenses with those of other comparable mutual funds. The Independent Trustees reviewed and discussed the Broadridge reports with independent legal counsel to the Independent Trustees. In addition to the information noted above, the Board also requested and received information regarding DMC’s policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; comparative client fee information; and any constraints or limitations on the availability of securities for certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, the investment manager’s ability to invest fully in accordance with Fund policies.
In considering information relating to the approval of the Fund’s advisory and sub-advisory agreements, as applicable, the Independent Trustees received assistance and advice from and met separately with independent legal counsel to the Independent Trustees and also received assistance and advice from an experienced and knowledgeable independent fund consultant, JDL Consultants, LLC (“JDL”). Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.
Nature, extent, and quality of services. The Board considered the services provided by DMC to the Fund and its shareholders. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Fund; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Fund; compliance by DMC and Delaware Distributors, L.P. (together, “Management”) personnel with the Code of Ethics adopted throughout the Delaware Funds® by Macquarie (“Delaware Funds”); and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of DMC and the emphasis placed on research in the investment process. The Board recognized DMC’s receipt of certain favorable industry distinctions during the past several years. The Board gave favorable consideration to DMC’s efforts to control expenses while maintaining service levels committed to Fund matters. The Board also noted the benefits provided to Fund shareholders through (a) each shareholder’s ability to: (i) exchange an investment in one Delaware Fund for the same class of shares in another Delaware Fund without a sales charge, or (ii) reinvest Fund dividends into additional shares of the Fund or into additional shares of other Delaware Funds, and (b) the privilege to combine holdings in other Delaware Funds to obtain a reduced sales charge. The Board was satisfied with the nature, extent, and quality of the overall services provided by DMC.
Nature, extent, and quality of services. The Board considered the services provided by each Sub-Adviser to the Fund. In reviewing the nature, extent, and quality of services, the Board considered reports furnished to it throughout the year at regular Board Meetings covering matters such as relative performance of the Fund; compliance of portfolio managers with the investment policies, strategies, and restrictions for the Fund; the compliance of Sub-Adviser personnel with its Code of Ethics; and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the
40    
current staffing of the Sub-Advisers and the emphasis placed on research in the investment process. The Board was satisfied with the nature, extent, and quality of the overall services provided by the Sub-Advisers.
Investment performance. The Board placed significant emphasis on the investment performance of the Fund in view of the importance of investment performance to shareholders. Although the Board considered performance reports and discussions with portfolio managers at Investment Committee meetings throughout the year, the Board gave particular weight to the Broadridge reports furnished for the Annual Meeting. The Broadridge reports prepared for the Fund showed the investment performance of its Class A shares in comparison to a group of similar funds as selected by Broadridge (the “Performance Universe”). A fund with the best performance ranked first, and a fund with the poorest performance ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the poorest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for the Fund was shown for the past 1-, 3-, 5-, and 10-year periods, to the extent, applicable, ended January 31, 2020. The Board’s objective is that the Fund’s performance for the 1-, 3-, and 5-year periods be at or above the median of its Performance Universe.
The Performance Universe for the Fund consisted of the Fund and all retail and institutional large-cap value funds as selected by Broadridge. The Broadridge report comparison showed that the Fund’s total return for the 1-year period was in the fourth quartile of its Performance Universe. The report further showed that the Fund’s total return for the 3-, 5-, and 10-year periods was in the third quartile, second quartile, and first quartile, respectively, of its Performance Universe. The Board observed that the Fund’s performance results were mixed. In evaluating the Fund’s performance, the Board considered the numerous investment and performance reports delivered by Management personnel to the Board’s Investments Committee. The Board was satisfied that Management was taking action to improve Fund performance and meet the Board’s performance objective.
Comparative expenses. The Board considered expense data for the Delaware Funds. Management provided the Board with information on pricing levels and fee structures for the Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of the Fund versus effective management fees and total expense ratios of a group of similar funds as selected by Broadridge (the “Expense Group”). In reviewing comparative costs, the Fund’s contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) within the Expense Group, taking into account any applicable breakpoints and fee waivers. The Fund’s total expenses were also compared with those of its Expense Group. The Broadridge total expenses, for comparative consistency, were shown by Broadridge for Class A shares and comparative total expenses including 12b-1 and non-12b-1 service fees. The Board’s objective is for the Fund’s total expense ratio to be competitive with those of the peer funds within its Expense Group.
The expense comparisons for the Fund showed that its actual management fee and total expenses were in the quartile with the lowest expenses of its Expense Group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to those of its Expense Group as shown in the Broadridge report.
    41
Other Fund information (Unaudited)
Delaware Value® Fund 
Board consideration of Investment Advisory and Sub-Advisory Agreements for Delaware Value Fund at a meeting held August 11-13, 2020 (continued)
Management profitability. The Board considered the level of profits realized by DMC in connection with the operation of the Fund. In this respect, the Board reviewed the Investment Management Profitability Analysis that addressed the overall profitability of DMC’s business in providing management and other services to each of the individual funds and the Delaware Funds as a whole. Specific attention was given to the methodology used by DMC in allocating costs for the purpose of determining profitability. Management stated that the level of profits of DMC, to a certain extent, reflects recent operational cost savings and efficiencies initiated by DMC. The Board considered DMC’s efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which DMC might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. As part of its work, the Board also reviewed a report prepared by JDL regarding MIMBT profitability as compared to certain peer fund complexes and the Independent Trustees met with JDL personnel to discuss DMC’s profitability in such context. The Board found that the management fees were reasonable in light of the services rendered and the level of profitability of DMC.
Management profitability. Trustees were also given available information on profits being realized by each of the Sub-Advisers in relation to the services being provided to the Fund and in relation to the Sub-Adviser’s overall investment advisory business, but believed such information to be of limited relevance because the sub-advisory fees are paid by DMC out of its management fee, and changes in the level of sub-advisory fees have no impact on Fund expenses. The Board was also provided information on potential fall-out benefits derived or to be derived by the Sub-Advisers in connection with their relationship to the Fund, such as reputational enhancement, soft dollar arrangements, or commissions paid to affiliated broker/dealers, as applicable.
Economies of scale. The Trustees considered whether economies of scale are realized by DMC as the Fund’s assets increase and the extent to which any economies of scale are reflected in the level of management fees charged. The Trustees reviewed the Fund’s advisory fee pricing and structure, approved by the Board and shareholders, which includes breakpoints, and which applies to most funds in the Delaware Funds complex. Breakpoints in the advisory fee occur when the advisory fee rate is reduced on assets in excess of specified levels. Breakpoints result in a lower advisory fee than would otherwise be the case in the absence of breakpoints, when the asset levels specified in the breakpoints are exceeded. The Board noted that, as of March 31, 2020, the Fund’s net assets exceeded the final breakpoint level. The Board believed that, given the extent to which economies of scale might be realized by DMC and its affiliates, the schedule of fees under the Investment Management Agreement provides a sharing of benefits with the Fund and its shareholders.
42    
Board of trustees / directors and officers addendum
Delaware Funds® by Macquarie
A mutual fund is governed by a Board of Trustees/Directors (“Trustees”), which has oversight responsibility for the management of a fund’s business affairs. Trustees establish procedures and oversee and review the performance of the investment manager, the distributor, and others who perform services for the fund. The independent fund trustees, in particular, are advocates for shareholder interests. Each trustee has served in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers with certain background and related information.
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Interested Trustee
Shawn K. Lytle1
610 Market Street
Philadelphia, PA 19106-2354
February 1970 		President,
Chief Executive Officer,
and Trustee 		President and
Chief Executive Officer
since August 2015
Trustee since
September 2015 		Global Head of Macquarie Investment Management2
(January 2019–Present)
Head of Americas of
Macquarie Group
(December 2017–Present)
Deputy Global Head of Macquarie Investment Management
(2017–2019)
Head of Macquarie Investment Management Americas
(2015–2017) 		85 Trustee — UBS Relationship Funds, SMA Relationship Trust, and UBS Funds
(May 2010–April 2015)
    43
Board of trustees / directors and officers addendum
Delaware Funds® by Macquarie 
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Independent Trustees
Jerome D. Abernathy
610 Market Street
Philadelphia, PA 19106-2354
July 1959 		Trustee Since January 2019 Managing Member, Stonebrook Capital Management, LLC (financial technology: macro factors and databases)
(January 1993-Present) 		85 None
Thomas L. Bennett
610 Market Street
Philadelphia, PA 19106-2354
October 1947 		Chair and Trustee Trustee since March 2005
Chair since March 2015 		Private Investor
(March 2004–Present) 		85 None
Ann D. Borowiec
610 Market Street
Philadelphia, PA 19106-2354
November 1958 		Trustee Since March 2015 Chief Executive Officer, Private Wealth Management (2011–2013) and Market Manager, New Jersey Private Bank (2005–2011) — J.P. Morgan Chase & Co. 85 Director — Banco Santander International
(October 2016–December 2019)
Director — Santander Bank, N.A. (December 2016–December 2019)
44    
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Joseph W. Chow
610 Market Street
Philadelphia, PA 19106-2354
January 1953 		Trustee Since January 2013 Private Investor
(April 2011–Present) 		85 Director and Audit Committee Member — Hercules Technology Growth Capital, Inc.
(July 2004–July 2014)
John A. Fry
610 Market Street
Philadelphia, PA 19106-2354
May 1960 		Trustee Since January 2001 President — Drexel University (August 2010–Present)
President — Franklin & Marshall College (July 2002–June 2010) 		85 Director; Compensation Committee and Governance Committee Member — Community Health Systems
(May 2004–Present)
Director — Drexel Morgan & Co. (2015–2019)
Director and Audit Committee Member — vTv Therapeutics Inc. (2017–Present)
Director and Audit Committee Member — FS Credit Real Estate Income Trust, Inc. (2018–Present)
Director — Federal Reserve
Bank of Philadelphia
(January 2020–Present)
    45
Board of trustees / directors and officers addendum
Delaware Funds® by Macquarie 
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Lucinda S. Landreth
610 Market Street
Philadelphia, PA 19106-2354
June 1947 		Trustee Since March 2005 Private Investor (2004–Present) 85 None
Frances A. Sevilla-Sacasa
610 Market Street
Philadelphia, PA 19106-2354
January 1956 		Trustee Since September 2011 Private Investor
(January 2017–Present)
Chief Executive Officer — Banco Itaú International
(April 2012–December 2016)
Executive Advisor to Dean (August 2011–March 2012) and Interim Dean
(January 2011–July 2011) — University of Miami School of Business Administration
President — U.S. Trust, Bank of America Private Wealth Management (Private Banking) (July 2007-December 2008) 		85 Trust Manager and Audit Committee Chair — Camden Property Trust
(August 2011–Present)
Director; Strategic
Planning and Reserves
Committee and Nominating
and Governance
Committee Member —
Callon Petroleum Company
(December 2019–Present)
Director; Audit Committee Member — Carrizo Oil & Gas, Inc. (March 2018–December 2019)
46    
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Thomas K. Whitford
610 Market Street
Philadelphia, PA 19106-2354
March 1956 		Trustee Since January 2013 Vice Chairman (2010–April 2013) — PNC Financial Services Group 85 Director — HSBC North America Holdings Inc.
(December 2013–Present)
Director — HSBC USA Inc.
(July 2014–Present)
Director — HSBC Bank USA, National Association
(July 2014–March 2017)
Director — HSBC Finance Corporation
(December 2013–April 2018)
    47
Board of trustees / directors and officers addendum
Delaware Funds® by Macquarie 
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Christianna Wood
610 Market Street
Philadelphia, PA 19106-2354
August 1959
 		Trustee Since January 2019 Chief Executive Officer and President — Gore Creek Capital, Ltd. (August 2009–Present) 85 Director; Finance Committee and Audit Committee Member — H&R Block Corporation
(July 2008–Present)
Director; Investments Committee, Capital and Finance Committee, and Audit Committee Member — Grange Insurance (2013–Present)
Trustee; Chair of Nominating and Governance Committee and Audit Committee Member — The Merger Fund (2013–Present), The Merger Fund VL (2013–Present); WCM Alternatives: Event-Driven Fund (2013–Present), and WCM Alternatives: Credit Event Fund (December 2017–Present)
Director; Chair of Governance Committee and Audit Committee Member — International Securities Exchange (2010–2016)
48    
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Janet L. Yeomans
610 Market Street
Philadelphia, PA 19106-2354
July 1948 		Trustee Since April 1999 Vice President and Treasurer (January 2006–July 2012), Vice President — Mergers & Acquisitions
(January 2003–January 2006), and Vice President and Treasurer
(July 1995–January 2003) — 3M Company 		85 Director; Personnel and Compensation Committee Chair; Member of Nominating, Investments, and Audit Committees for various periods throughout directorship — Okabena Company (2009–2017)
Officers
David F. Connor
610 Market Street
Philadelphia, PA 19106-2354
December 1963 		Senior Vice President, General Counsel, and Secretary Senior Vice President, since May 2013; General Counsel since May 2015; Secretary since October 2005 David F. Connor has served in various capacities at different times at Macquarie Investment Management. 85 None3
Daniel V. Geatens
610 Market Street
Philadelphia, PA 19106-2354
October 1972 		Vice President and Treasurer Vice President and Treasurer since October 2007 Daniel V. Geatens has served in various capacities at different times at Macquarie Investment Management. 85 None3
    49
Board of trustees / directors and officers addendum
Delaware Funds® by Macquarie 
Name,
Address,
and Birth Date 		Position(s)
Held with
Fund(s) 		Length of Time
Served 		Principal
Occupation(s)
During the
Past Five Years 		Number of
Portfolios in Fund
Complex Overseen
by Trustee
or Officer 		Other
Directorships
Held by
Trustee
or Officer
Richard Salus
610 Market Street
Philadelphia, PA 19106-2354
October 1963 		Senior Vice President and Chief Financial Officer Senior Vice President and Chief Financial Officer since November 2006 Richard Salus has served in various capacities at different times at Macquarie Investment Management. 85 None
1 Shawn K. Lytle is considered to be an “Interested Trustee” because he is an executive officer of the Fund’s(s’) investment advisor.
2 Macquarie Investment Management is the marketing name for Macquarie Management Holdings, Inc. and its subsidiaries, including the Fund’s(s’) investment advisor, principal underwriter, and its transfer agent.
3 David F. Connor and Daniel V. Geatens serve in similar capacities for the six portfolios of the Optimum Fund Trust, which have the same investment advisor, principal underwriter, and transfer agent as the registrant. Mr. Geatens also serves as the Chief Financial Officer of the Optimum Fund Trust and he is the Chief Financial Officer and Treasurer for Macquarie Global Infrastructure Total Return Fund Inc. In addition, Mr. Connor serves as Chief Legal Officer and Secretary for Macquarie Global Infrastructure Total Return Fund Inc.
The Statement of Additional Information for the Fund(s) includes additional information about the Trustees and Officers and is available, without charge, upon request by calling 800 523-1918.
50    
About the organization
Board of trustees
Shawn K. Lytle
President and
Chief Executive Officer
Delaware Funds®
by Macquarie
Philadelphia, PA
Jerome D. Abernathy
Managing Director
Stonebrook Capital
Management, LLC
Jersey City, NJ
Thomas L. Bennett
Chairman of the Board
Delaware Funds
by Macquarie
Private Investor
Rosemont, PA
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
Senior Vice President,
General Counsel,
and Secretary
Delaware Funds
by Macquarie
Philadelphia, PA
Daniel V. Geatens
Vice President and
Treasurer
Delaware Funds
by Macquarie
Philadelphia, PA
Richard Salus
Senior Vice President and
Chief Financial Officer
Delaware Funds
by Macquarie
Philadelphia, PA
This annual report is for the information of Delaware Value® Fund shareholders, but it may be used with prospective investors when preceded or accompanied by the Delaware 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 Fund’s 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 SEC’s website at sec.gov. In addition, a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities and the Schedule of Investments included in the Fund’s most recent Form N-PORT are available without charge on the Fund’s website at delawarefunds.com/literature. The Fund’s Forms N-PORT may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C.; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330.
Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Fund’s website at delawarefunds.com/proxy; and (ii) on the SEC’s website at sec.gov.
    51
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.
Information we may collect
and use
We collect personal information about you to help us identify you as our potential, current, or former customer; to process your requests and transactions; to offer investment services to you; or to tell you about our products or services we believe you may want to use. The type of personal information we collect depends on the products or services you request and may include the following:
• Information from you: When you submit your application or other forms or request information on our products (online or otherwise), you give us information such as your name, address, Social Security number, and your financial history.
• Information about your transactions: We keep information about your transactions with us, such as the products you buy from us; the amount you paid for those products; your investment activity; and your account balances.
• Information from your employer: In connection with administering your retirement plan, we may obtain information about you from your employer.
• Information received from third parties: In order to verify your identity or to prevent fraud, we may obtain information about you from third parties.
How we use your personal information
We do not disclose nonpublic personal information about our potential, current, and former customers unless allowed or required by law. We may share your personal information within our companies and with certain service providers. They use this information to process transactions you have requested; provide customer service; and inform you of products or services we offer that you may find useful. Our service providers may or may not be affiliated with us. They include financial service providers (for example, third-party administrators;
broker/dealers; and other financial services companies with whom we have joint marketing agreements). Our service providers also include nonfinancial companies and individuals (for example, consultants; information services vendors; and companies that perform mailing or marketing services on our behalf). Information obtained from a report prepared by a service provider may be kept by the service provider and shared with other persons; however, we require our service providers to protect your personal information and to use or disclose it only for the work they are performing for us, or as permitted by law.
We also may provide information to regulatory authorities, law enforcement officials, and others to prevent fraud or when we believe in good faith that the law requires disclosure. In the event of a sale of all or part of our businesses, we may share
 
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customer information as part of the sale. We do not sell or share your information with outside marketers who may want to offer you their own products and services.
Security of information
Keeping your information safe is one of our most important responsibilities. We maintain physical, electronic, and procedural safeguards to protect your information. Our employees are authorized to access your information only when they need it to provide you with products and services or to maintain your accounts. Employees who have access to your personal information are required to keep it strictly confidential. We provide training to our employees about the importance of protecting the privacy of your information.
Macquarie Investment Management (MIM), a member of Macquarie Group, refers to the companies comprising the asset management division of Macquarie Group. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
Other than Macquarie Bank Limited (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.
This privacy practices notice is being provided on behalf of the following:
Delaware Capital Management
Delaware Capital Management Advisers, Inc.
Delaware Distributors, Inc.
Delaware Distributors, L.P.
Delaware Funds® by Macquarie
Delaware Enhanced Global Dividend and Income Fund
Delaware Group® Adviser Funds
Delaware Group Cash Reserve
Delaware Group Equity Funds I
Delaware Group Equity Funds II
Delaware Group Equity Funds IV
Delaware Group Equity Funds V
Delaware Group Foundation Funds
Delaware Group Global & International Funds
Delaware Group Government Fund
Delaware Group Income Funds
Delaware Group Limited-Term Government Funds
Delaware Group State Tax-Free Income Trust
Delaware Group Tax-Free Fund
Delaware Investments® Colorado Municipal Income Fund, Inc.
Delaware Investments Dividend and Income Fund, Inc.
Delaware Investments Minnesota Municipal Income Fund II, Inc.
Delaware Investments National Municipal Income Fund
Delaware Pooled® Trust
Delaware VIP® Trust
Voyageur Insured Funds
Voyageur Intermediate Tax Free Funds
Voyageur Mutual Funds
Voyageur Mutual Funds II
Voyageur Mutual Funds III
Voyageur Tax Free Funds
Delaware Investments Advisers Partner, Inc.
Delaware Investments Distribution Partner, Inc.
Delaware Investments Fund Advisers
Delaware Investments Fund Services Company
Delaware Investments Management Company, LLC
Delaware Management Company
Delaware Management Trust Company
Delaware Service Company, Inc.
Four Corners Capital Management, LLC
Macquarie Absolute Return MBS Fund, LP
Macquarie Absolute Return MBS Fund
Macquarie Alternative Strategies
Macquarie Allegiance Capital, LLC
Macquarie Asset Advisers
Macquarie Emerging Markets Small Cap Fund, LLC
Macquarie Funds Management Hong Kong Limited
    This page is not part of the annual report.    ii
Delaware Funds® by Macquarie privacy practices notice
Macquarie Global Infrastructure Total Return Fund Inc.
Macquarie Investment Management Advisers
Macquarie Investment Management Austria Kapitalanlage AG
Macquarie Investment Management Business Trust
Macquarie Investment Management Europe Limited
Macquarie Investment Management Europe S.A.
Macquarie Investment Management General Partner, Inc.
Macquarie Investment Management Global Limited
Macquarie Multi-Cap Growth Fund, LP
Macquarie Real Estate Absolute Return Partners, Inc.
Macquarie Total Return Fund Inc.
Optimum Fund Trust
Revised February 2020
 
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Delaware Funds® by Macquarie
Equity funds
US equity funds
• Delaware Equity Income Fund1
• Delaware Growth and Income Fund1
• Delaware Growth Equity Fund
• Delaware Mid Cap Value Fund
• Delaware Opportunity Fund
• Delaware Select Growth Fund2
• Delaware Small Cap Core Fund3
• Delaware Small Cap Growth Fund
• Delaware Small Cap Value Fund
• Delaware Smid Cap Growth Fund
• Delaware Special Situations Fund
• Delaware U.S. Growth Fund
• Delaware Value® Fund
Global / international equity funds
• Delaware Emerging Markets Fund
• Delaware Global Equity Fund
• Delaware International Fund
• Delaware International Small Cap Fund
• Delaware International Value Equity Fund
Alternative / specialty funds
• Delaware Covered Call Strategy Fund
• Delaware Healthcare Fund
• Delaware Hedged U.S. Equity Opportunities Fund
• Delaware Premium Income Fund
Multi-asset funds
• Delaware Global Listed Real Assets Fund
• Delaware Strategic Allocation Fund
• Delaware Total Return Fund
• Delaware Wealth Builder Fund
 
1On November 18, 2020, the Board of Trustees of Delaware Group® Equity Funds IV (the “Board”) approved the replacement of the Fund's current portfolio managers with the Global Systematic Investment team of the Fund's current sub-advisor, Macquarie Investment Management Global Limited (MIMGL). In connection with this determination, the Board approved certain changes to the Fund's investment strategies. These portfolio management and strategy changes will be effective on or about January 29, 2021 (the “Effective Date”). The investment strategy changes may result in higher portfolio turnover in the near term, as the new portfolio management team purchases and sells securities to accommodate the investment strategy changes. A higher portfolio turnover is likely to cause the Fund to realize capital gains and incur transaction costs. You should consult your financial advisor about the changes that will result from the investment strategy changes.
Carefully consider a Fund’s investment objectives, risk factors, charges, and expenses before investing.
This and other information can be found in the Fund’s prospectus and, if available, its summary prospectus.
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.
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Fixed income funds
Taxable fixed income funds
• Delaware Corporate Bond Fund
• Delaware Diversified Income Fund
• Delaware Emerging Markets Debt Corporate Fund
• Delaware Extended Duration Bond Fund
• Delaware Floating Rate Fund
• Delaware Floating Rate II Fund
• Delaware Fund for Income
• Delaware High-Yield Opportunities Fund
• Delaware International Opportunities Bond Fund
• Delaware Investment Grade Fund
• Delaware Investments Ultrashort Fund
• Delaware Limited Duration Bond Fund
• Delaware Limited-Term Diversified Income Fund
• Delaware Strategic Income Fund
• Delaware Strategic Income II Fund
 
Municipal fixed income funds
• Delaware Minnesota High-Yield Municipal Bond Fund
• Delaware National High-Yield Municipal Bond Fund
• Delaware Tax-Free Arizona Fund
• Delaware Tax-Free California Fund
• Delaware Tax-Free Colorado Fund
• Delaware Tax-Free Idaho Fund
• Delaware Tax-Free Minnesota Fund
• Delaware Tax-Free Minnesota Intermediate Fund
• Delaware Tax-Free New Jersey Fund
• Delaware Tax-Free New York Fund
• Delaware Tax-Free Oregon Fund
• Delaware Tax-Free Pennsylvania Fund
• Delaware Tax-Free USA Fund
• Delaware Tax-Free USA Intermediate Fund
2On May 20, 2020, the Board of Trustees approved the replacement of the Fund’s current sub-advisor with the US Growth Equity team of the Fund’s investment manager, Delaware Management Company. In connection with this determination, the Board approved certain changes to the Fund’s investment strategies. These portfolio management and strategy changes were effective July 31, 2020. The investment strategy changes may result in higher portfolio turnover in the near term, as the new portfolio management team purchases and sells securities to accommodate the investment strategy changes. A higher portfolio turnover is likely to cause the Fund to realize capital gains and incur transaction costs. You should consult your financial advisor about the changes that will result from the investment strategy changes.
3Closed to certain new investors.
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Caring for your portfolio
Over a lifetime, things change. When they do, it’s important to ensure that your investments stay in tune with your personal situation.
If you decide to make some changes, check
out the convenient options provided by Macquarie Investment Management. We try to make it easy for you to avoid some of the sales charges that you might otherwise have to pay when you withdraw and invest your money with another firm.
Most importantly, you may generally
exchange all or part of your shares in one Delaware Funds® by Macquarie mutual fund for shares of the same class of another fund without paying a front-end sales charge or a contingent deferred sales charge (CDSC).
Choose the investment method suitable for you
After you’ve evaluated your overall investments, you have choices about how to implement
any changes:
1. Move assets all at once at any time.
2. Migrate funds to a different investment slowly through a systematic exchange. You can arrange automatic monthly exchanges of your shares in one Delaware fund for those in another Delaware fund. Systematic exchanges are subject to the same rules as regular exchanges, which are explained in the right column, including a $100 minimum monthly amount per fund.
3. Use our automatic investing plan for future investments in different vehicles. To allocate your future investments differently, the Macquarie Investment Management automatic investing plan allows you to make regular monthly or quarterly investments directly from your checking account.
Important notes about exchanging or redeeming shares
For automated exchanges, a minimum exchange of $100 per fund is required monthly. If the value of your account is $5,000 or more, you can make systematic withdrawals of at least $25 monthly,
or $75 quarterly. If the annual amount you withdraw is less than 12% of your account balance at the time the systematic withdrawal plan is established, the CDSC ordinarily applicable to certain fund classes will be waived. More details are available in your prospectus or at
delawarefunds.com/literature.
If you exchange shares from Class R shares of any fund, you will pay any applicable sales charge on your new shares.
When exchanging Class C shares of one fund for the same class of shares in other funds, your new shares will be subject to the same CDSC as the shares you originally purchased. The holding period for the CDSC will also remain the same, with the amount of time you held your original shares being credited toward the holding period of your new shares.
You do not pay sales charges on shares that you acquired through the reinvestment of dividends. You may have to pay taxes on your exchange. When you exchange shares, you are purchasing shares in another fund, so you should be sure to get a copy of the fund’s prospectus and
read it carefully before buying shares through an exchange.
We may refuse the purchase side of any exchange request if, in the manager’s judgment, the fund would be unable to invest effectively in accordance with its investment objective and policies, or would otherwise potentially be adversely affected.
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Contact information
Shareholder assistance by phone
800 523-1918, weekdays from 8:30am to
6:00pm ET
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 • 610 Market Street • Philadelphia, PA 19106-2354
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, 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.
(1467602)
AR-456-121
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Item 2. Code of Ethics

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of the registrant’s Code of Business Ethics has been posted on the Delaware Funds® by Macquarie Internet Web site at www.delawarefunds.com. Any amendments to the Code of Business Ethics, and information on any waiver from its provisions granted by the registrant, will also be posted on this Web site within five business days of such amendment or waiver and will remain on the Web site for at least 12 months.

Item 3. Audit Committee Financial Expert

The registrant’s Board of Trustees has determined that certain members of the registrant’s Audit Committee are audit committee financial experts, as defined below. For purposes of this item, an “audit committee financial expert” is a person who has the following attributes:

a. An understanding of generally accepted accounting principles and financial statements;

b. The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves;

c. Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrant’s financial statements, or experience actively supervising one or more persons engaged in such activities;

d. An understanding of internal controls and procedures for financial reporting; and

e. An understanding of audit committee functions.

An “audit committee financial expert” shall have acquired such attributes through:

a. Education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions;

b. Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions;

c. Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or

d. Other relevant experience.

The registrant’s Board of Trustees has also determined that each member of the registrant’s Audit Committee is independent. In order to be “independent” for purposes of this item, the Audit Committee member may not: (i) other than in his or her capacity as a member of the Board of Trustees or any committee thereof, accept directly or indirectly any consulting, advisory or other compensatory fee from the issuer; or (ii) be an “interested person” of the registrant as defined in Section 2(a)(19) of the Investment Company Act of 1940.

The names of the audit committee financial experts on the registrant’s Audit Committee are set forth below:

Jerome D. Abernathy
John A. Fry
Thomas K. Whitford, Chair
Christianna Wood

Item 4. Principal Accountant Fees and Services

(a) Audit fees.

The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $30,910 for the fiscal year ended November 30, 2020.

The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrant’s annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $31,670 for the fiscal year ended November 30, 2019.

(b) Audit-related fees.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended November 30, 2020.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $903,282 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year-end audit procedures; group reporting and subsidiary statutory audits.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the registrant’s financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended November 30, 2019.

The aggregate fees billed by the registrant’s independent auditors for services relating to the performance of the audit of the financial statements of the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $909,000 for the registrant’s fiscal year ended November 30, 2019. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year-end audit procedures; group reporting and subsidiary statutory audits.

(c) Tax fees.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant were $4,850 for the fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant were $4,850 for the fiscal year ended November 30, 2019. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.

The aggregate fees billed by the registrant’s independent auditors for tax-related services provided to the registrant’s investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2019. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

(d) All other fees.

The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended November 30, 2020.

The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrant’s independent auditors to the registrant’s adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2020. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended November 30, 2019.

The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrant’s independent auditors to the registrant’s adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrant’s fiscal year ended November 30, 2019. The percentage of these fees relating to services approved by the registrant’s Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.

(e) The registrant’s Audit Committee has established pre-approval policies and procedures as permitted by Rule 2-01(c)(7)(i)(B) of Regulation S-X (the “Pre-Approval Policy”) with respect to services provided by the registrant’s independent auditors. Pursuant to the Pre-Approval Policy, the Audit Committee has pre-approved the services set forth in the table below with respect to the registrant up to the specified fee limits. Certain fee limits are based on aggregate fees to the registrant and other registrants within the Delaware Funds® by Macquarie.

Service Range of Fees
Audit Services
Statutory audits or financial audits for new Funds up to $40,000 per Fund
Services associated with SEC registration statements (e.g., Form N-1A, Form N-14, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters for closed-end Fund offerings, consents), and assistance in responding to SEC comment letters up to $10,000 per Fund
Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered “audit-related services” rather than “audit services”) up to $25,000 in the aggregate
Audit-Related Services
Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and /or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered “audit services” rather than “audit-related services”) up to $25,000 in the aggregate
Tax Services
U.S. federal, state and local and international tax planning and advice (e.g., consulting on statutory, regulatory or administrative developments, evaluation of Funds’ tax compliance function, etc.) up to $25,000 in the aggregate
U.S. federal, state and local tax compliance (e.g., excise distribution reviews, etc.) up to $5,000 per Fund
Review of federal, state, local and international income, franchise and other tax returns up to $5,000 per Fund

Under the Pre-Approval Policy, the Audit Committee has also pre-approved the services set forth in the table below with respect to the registrant’s investment adviser and other entities controlling, controlled by or under common control with the investment adviser that provide ongoing services to the registrant (the “Control Affiliates”) up to the specified fee limit. This fee limit is based on aggregate fees to the investment adviser and its Control Affiliates.


Service Range of Fees
Non-Audit Services
Services associated with periodic reports and other documents filed with the SEC and assistance in responding to SEC comment letters up to $10,000 in the aggregate

The Pre-Approval Policy requires the registrant’s independent auditors to report to the Audit Committee at each of its regular meetings regarding all services initiated since the last such report was rendered, including those services authorized by the Pre-Approval Policy.

(f) Not applicable.

(g) The aggregate non-audit fees billed by the registrant’s independent auditors for services rendered to the registrant and to its investment adviser and other service providers under common control with the adviser were $8,455,000 and $4,687,000 for the registrant’s fiscal years ended November 30, 2020 and November 30, 2019, respectively.

(h) In connection with its selection of the independent auditors, the registrant’s Audit Committee has considered the independent auditors’ provision of non-audit services to the registrant’s investment adviser and other service providers under common control with the adviser that were not required to be pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X. The Audit Committee has determined that the independent auditors’ provision of these services is compatible with maintaining the auditors’ independence.

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.

(2) Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT.

(3) Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934.

Not applicable.

(b)  Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT.

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf, by the undersigned, thereunto duly authorized.

DELAWARE GROUP® EQUITY FUNDS II

/s/SHAWN K. LYTLE
By: Shawn K. Lytle
Title:  President and Chief Executive Officer
Date: February 3, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/SHAWN K. LYTLE
By: Shawn K. Lytle
Title:  President and Chief Executive Officer
Date: February 3, 2021
 
/s/RICHARD SALUS
By: Richard Salus
Title:  Chief Financial Officer
Date: February 3, 2021