Delaware Small Cap Core Fund*

Key features

  • Stocks are selected by a highly experienced small-cap focused investment team, averaging over 25 years of industry experience
  • Focused on uncovering the best opportunities across the traditionally under-researched US small company market
  • A daily review of the portfolio’s risk exposures ensures alpha is driven by stock selection
Fund information
Inception date12/29/1998
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDCCIX
CUSIP24610B859

Institutional Class shares are available only to certain investors. See the prospectus for more information

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.

Total returns may reflect waivers and/or expense reimbursements by the manager and/or distributor for some or all of the periods shown. Performance would have been lower without such waivers and reimbursements.

Average annual total return

as of month-end (10/31/2019)

as of quarter-end (09/30/2019)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)18.83%5.01%11.21%7.73%13.71%10.40%12/29/1998
Russell 2000 Index17.18%4.90%10.96%7.37%12.27%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-1.06%-7.49%9.60%8.78%12.89%10.38%12/29/1998
Russell 2000 Index-2.40%-8.89%8.23%8.19%11.19%n/a

Returns for less than one year are not annualized.

*Effective at the close of business on Oct. 19, 2018, Delaware Small Cap Core Fund was closed to certain new investors. Existing shareholders of the Fund and certain eligible investors, as outlined in the prospectus, may continue to purchase additional shares in existing or new accounts, including purchases through reinvestment of dividends or capital gains distributions and exchanges. Please read the latest prospectus and the summary prospectus for more information concerning this event. Please request a prospectus by calling 877 693-3546 800 523-1918 or visiting delawarefunds.com/literature

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

Expense ratio
Gross0.87%
Net0.87%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
201914.71%3.32%-1.06%n/an/a
2018-0.99%9.09%3.76%-21.11%-11.59%
20171.45%3.41%5.98%2.72%14.20%
2016-1.16%3.20%7.02%11.20%21.39%
20153.11%0.14%-9.75%3.71%-3.35%
20141.43%3.37%-5.30%9.63%8.84%
201313.10%2.52%13.14%9.20%43.24%
201212.55%-3.13%5.04%0.96%15.62%
20117.92%1.61%-21.97%17.55%0.58%
20109.19%-9.28%10.77%17.32%28.72%
2009-12.23%20.67%15.99%3.67%27.35%

Institutional Class shares are available only to certain investors. See the prospectus for more information

Portfolio characteristics - as of 10/31/2019Russell 2000 Index
Number of holdings1281,651
Market cap (median) Source: FactSet$2.3 billion686419500.000000000
Market cap (weighted average) Source: FactSet$2.8 billion2346885242.910000000
Portfolio turnover (last fiscal year)38%n/a
Beta (relative to Russell 2000 Index) (view definition)1.02n/a
Annualized standard deviation, 3 years (view definition)17.49n/a
Portfolio composition as of 10/31/2019Total may not equal 100% due to rounding.
Domestic equities95.4%
Cash and cash equivalents2.6%
International equities & depositary receipts2.0%
Top 10 holdings as of 10/31/2019

Holdings are as of the date indicated and subject to change.

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes. Please see the Fund’s complete list of holdings for more information.

Holdings based by issuer.

Holding% of portfolio
Spire Inc.1.82%
South Jersey Industries Inc.1.65%
Tetra Tech Inc.1.52%
Steven Madden Ltd.1.47%
NORTHWESTERN CORP1.47%
First Industrial Realty Trust Inc.1.39%
FEDERAL SIGNAL CORP1.34%
CONMED CORP1.22%
Great Western Bancorp Inc.1.22%
Q2 Holdings Inc.1.22%
Total % Portfolio in Top 10 holdings14.32%
Sector allocation as of 10/31/2019

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes. Please see the Fund’s complete list of holdings for more information.

SectorFund
Finance17.8%
Healthcare15.5%
Technology14.3%
Capital goods10.6%
REIT8.6%
Basic materials8.3%
Utilities4.9%
Business services4.6%
Consumer discretionary3.6%
Consumer services2.7%
Consumer staples2.2%
Communications services1.4%
Credit cyclicals1.1%
Energy0.8%
Transportation0.6%
Media0.4%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20190.0000.000
20181.9680.091
20171.9220.025
20160.2390.015
20150.5900.000
20141.0780.000
20130.4980.000
20120.0000.044
20110.0000.000
20100.0000.070
20090.0000.005

1If a Fund makes a distribution from any source other than net income, it is required to provide shareholders with a notice disclosing the source of such distribution (each a "Notice"). The amounts and sources of distributions reported above and in each Notice are only estimates and are not provided for tax reporting purposes. Each Fund will send each shareholder a Form 1099 DIV for the calendar year that will provide definitive information on how to report the Fund's distributions for federal income tax purposes. The information in the table above will not be updated to reflect any subsequent recharacterization of dividends and distributions. Click here to see recent Notices pertaining to the Fund (if any).

2Information on return of capital distributions (if any) is only provided from June 1, 2014 onward.

3Includes both short- and long-term capital gains.

Institutional Class shares are available only to certain investors. See the prospectus for more information

Francis X. Morris

Francis X. Morris 

Executive Director, Chief Investment Officer — US Core Equity

Start date on the Fund: November 2004

Years of industry experience: 36

(View bio)


Chris Adams

Christopher S. Adams, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 31

(View bio)


Mike Morris

Michael S. Morris, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 26

(View bio)


Donald Padilla

Donald G. Padilla, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 32

(View bio)


David Reidinger

David E. Reidinger 

Vice President, Senior Portfolio Manager

Start date on the Fund: October 2016

Years of industry experience: 26

(View bio)


Institutional Class shares are available only to certain investors. See the prospectus for more information

The table below describes the fees and expenses that you may pay if you buy and hold shares of the Fund.

Shareholder fees
Maximum sales charge (load) imposed on purchases as a percentage of offering pricenone
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.66%
Distribution and service (12b-1) feesnone
Other expenses0.21%
Total annual fund operating expenses0.87%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.87%

Institutional Class shares are available only to certain investors. See the prospectus for more information

This commentary is currently not available. Please check back later.

Delaware Small Cap Core Fund Quarterly commentary March 31, 2018

Market Review

Coming off a strong January, the Fund’s benchmark, the Russell 2000® Index, suffered a precipitous fall in February, dropping 3.87% for the month. However, the benchmark bounced back in March, returning 1.29%, and ended the first quarter of 2018 down 0.08%. Value stocks underperformed growth stocks during the quarter, with the Russell 2000® Growth Index returning 2.30% and the Russell 2000® Value Index falling 2.64%. Moving up the market capitalization range, the Russell Midcap® Index lost 0.46% and the Russell 1000® Index had the weakest performance with a loss of 0.69% for the quarter.

The price of West Texas Intermediate (WTI) crude oil was volatile during the first quarter, partly because of doubts in the market about the appropriate price for the commodity. WTI started the year at $60.46 a barrel, reached a high for the quarter of $66.27 a barrel at the end of January, then fell to $59.20 a barrel in February before closing the quarter at $64.91 a barrel, a quarterly increase of about 7%. The benchmark’s energy sector declined more than 13% during the quarter. The interest rate sensitive credit cyclicals, real estate investment trusts (REITs), and utilities sectors also underperformed as rates increased. The benchmark’s technology and healthcare sectors outperformed, led by technology companies in the software industry and biotechnology companies in the healthcare sector.

On the economic front, the Federal Open Market Committee (FOMC) increased the federal funds rate by 0.25 percentage points at its March meeting. We continue to believe that the US Federal Reserve will act when it believes the economy can support it. In the fourth quarter, gross domestic product (GDP) growth measured a favorable 2.9% (data: US Commerce Department). Economists agree that the optimal GDP growth rate for small-cap equity performance has been between 2% and 4% (Bureau of Economic Analysis).

The unemployment rate remained at a historic low of 4.1% in March. Most other economic indicators continued to improve. The Conference Board Consumer Confidence Index remained notably high at 127.1 in March. The Institute for Supply Management’s Purchasing Managers’ Index® was also strong, posting 59.3 for March. The National Federation of Independent Business (NFIB) Index of Small Business Optimism recorded its 16th consecutive month of historically high readings, with a March value of 107.6. The housing market continued to be robust, despite the gradual increase in mortgage rates. The February Existing Homes Sales report jumped 3.0% to a seasonally adjusted annual rate of 5.54 million units after slight declines the previous two months. Hefty gains in the Southern and Western portions of the United States boosted sales but, in our view, a chronic shortage of houses on the market remains an obstacle heading into the spring selling season. Overall, these readings indicate a relatively healthy economy, albeit one that we continue to monitor carefully.

Within the Fund

For the first quarter of 2018, stock selection was the main detractor from the Fund’s relative performance versus the benchmark.

In the healthcare sector, stock selection and an underweight allocation were the main detractors from the Fund’s relative performance during the quarter. The Fund’s holdings in the biotechnology industry gained 4% during the quarter compared with the industry’s 12% return in the benchmark. Shares of Adamas Pharmaceuticals Inc., which specializes in therapies for chronic disorders of the central nervous system — including Parkinson’s disease, Alzheimer’s disease, and epilepsy — fell 29% during the quarter. The stock sold off in February following unexpected news from the Food and Drug Administration (FDA) that a competitor, privately held Osmotica Pharmaceuticals, received approval for a therapy that will indirectly compete with Adamas’ Parkinson’s disease treatment, Gocovri. Osmotica has a more limited label than Gocovri with no clearly established clinical benefit in treating Levodopa-induced dyskinesia, unlike Gocovri. While this news was unexpected, we believe the market has overreacted; we remain positive on Adamas as the company has fully launched Gocovri, reporting positive news on its fourth quarter earnings call. We added to the Fund’s position on the stock’s weakness as we believe there will be strong future growth from the company’s existing treatments and pipeline of therapies.

Stock selection in the business services sector also detracted from the Fund’s relative performance. Shares of consumer-directed benefits company, WageWorks Inc., declined 27% during the quarter. The stock sold off when the company’s audit committee delayed filing WageWorks’ 2017 10-K while it investigated accounting practices for certain contracts. We believe a potential restatement will be manageable and we will continue to monitor the results. However, we trimmed the Fund’s position in WageWorks.

Shares of Macom Technology Solutions Holdings Inc. declined 49% during the quarter, detracting from the Fund’s relative performance. The stock sold off after reporting weaker-than-expected earnings and sales. Some of the weakness came from cyclical pressure in China that we believe should subside in 2018. While the company faces certain headwinds, we maintained the Fund’s position in Macom as we believe it is well positioned to benefit from multiple long-term growth drivers, including optical data center connectivity and 5G wireless network infrastructure.

In the technology sector, stock selection contributed to the Fund’s performance, led by companies in the Internet and software industries. Shares of online and mobile restaurant pick-up and delivery company GrubHub Inc. increased 41% during the quarter. In February, the company announced a transformative partnership with Yum! Brands that boosted the stock’s price. This partnership will leverage Yum! Brands’ Pizza Hut delivery infrastructure, the largest in the nation, to deliver food from GrubHub clients as well as Yum! Brands’ other restaurants, Taco Bell and KFC. Additionally, the company reported strong earnings for the year and increased its 2018 guidance. We trimmed the Fund’s position in GrubHub to maintain its weight as we continue to believe the company has room for earnings growth.

Callidus Software Inc., one of the Fund’s largest holdings, advanced 25%. During the quarter, the company agreed to be acquired by SAP for a 12% premium. We trimmed the Fund’s position in Callidus Software following the announcement of the deal at the end of January; we plan to hold the remaining shares in the Fund until the deal’s expected close in early April for cash.

Shares of Proofpoint Inc., an email security company, returned 28% during the quarter. The company reported strong growth rates and an operating margin expansion that contributed to the stock’s performance. We continue to own shares of Proofpoint as we believe the company’s 2018 outlook remains strong.

During the quarter, we increased the Fund’s overweight to the capital goods sector as we purchased two new positions. In the finance and basic materials sectors, the Fund remains overweight. We reduced the relative overweight to the business services sector as we trimmed several positions. The Fund remains underweight to the healthcare and transportation sectors, and to most of the consumer-oriented sectors, where we continue to look for what we view as strong businesses with the potential for organic growth.

Outlook

We maintain a positive outlook for 2018. Most economic trends indicate growth, including annualized US GDP growth of roughly 3% in the last three quarters of 2017. We have started to see positive indicators from consumers in terms of spending and would like to see that trend continue. The lower tax rate passed by Congress should benefit US corporate earnings. We will focus on how companies choose to spend their additional income. Early indications, in our view, are that this will vary depending on a company’s business needs and capital management policies. We would like to see an infrastructure bill enacted in Washington, D.C., but that may materialize more quickly at the state level. New Fed Chairman Jerome Powell is likely to maintain the Fed’s relative easy monetary practices that were put in place by his predecessor, Janet Yellen, while continuing her policy of gradual increases in the federal funds rate throughout 2018.

Because the market’s overall volatility level was notably low during 2017, it wouldn’ be unreasonable to expect the recent increased volatility to remain in the coming year, in our view. On balance, we believe the current macroeconomic environment favors active managers who can apply thorough company-level analysis when making investment decisions. We continue to maintain our strategy of investing in companies that in our view have strong balance sheets and cash flow, sustainable competitive advantages, and high-quality management teams that can deliver value to shareholders.

Past performance is not a guarantee of future results.

Index definitions

The Russell 2000 Growth Index measures the performance of the small-cap growth segment of the US equity universe. It includes those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 2000 Value Index measures the performance of the small-cap value segment of the US equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

The Russell 1000 Index measures the performance of the large-cap segment of the US equity universe.

The Russell Midcap Index measures performance of the 800 smallest companies (31% of total capitalization) in the Russell 1000 Index, with weighted average market capitalization of approximately $6.7 billion, median capitalization of $3.6 billion, and market capitalization of the largest company $13.7 billion.

The Conference Board Consumer Confidence Index is a barometer of the health of the US economy from the perspective of the consumer. The index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income.

The Purchasing Managers’ Index is an indicator of the economic health of the manufacturing sector.

The NFIB Small Business Optimism Index is a survey asking small business owners a battery of questions related to their expectations for the future and their plans to hire, build inventory, borrow, and expand.

Gross domestic product is a measure of all goods and services produced by a nation in a year.

Index performance returns do not reflect management fees, transaction costs, or expenses. Indices are unmanaged, and one cannot invest directly in an index.

[476618] 04/18

The views expressed represent the Manager's assessment of the Fund and market environment as of the date indicated, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Information is as of the date indicated and subject to change.

Document must be used in its entirety.

*Effective at the close of business on Oct. 19, 2018, Delaware Small Cap Core Fund was closed to certain new investors. Existing shareholders of the Fund and certain eligible investors, as outlined in the prospectus, may continue to purchase additional shares in existing or new accounts, including purchases through reinvestment of dividends or capital gains distributions and exchanges. Please read the latest prospectus and the summary prospectus for more information concerning this event. Please request a prospectus by calling 877 693-3546 800 523-1918 or visiting delawarefunds.com/literature

All third-party marks cited are the property of their respective owners.

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.

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 clicking the prospectus link located in the right-hand sidebar or calling 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

The Fund’s investment manager, Delaware Management Company (Manager), may permit its affiliates, Macquarie Investment Management Global Limited (MIMGL) and Macquarie Funds Management Hong Kong Limited, to execute Fund security trades on behalf of the Manager. The Manager may also seek quantitative support from MIMGL.

Investing involves risk, including the possible loss of principal.

Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

REIT investments are subject to many of the risks associated with direct real estate ownership, including changes in economic conditions, credit risk, and interest rate fluctuations.

International investments entail risks not ordinarily associated with US investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.

Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 11/19/2019)

Institutional ClassPriceNet change
NAV$23.510.10
Max offer price$23.51n/a

Total net assets (as of 10/31/2019)

$4.8 billion all share classes

Overall Morningstar RatingTM

 
Institutional Class shares (as of 10/31/2019)
RatingNo. of funds
Overall5640
3 Yrs4640
5 Yrs4510
10 Yrs5371
Morningstar categoryMorningstar Small Blend Category

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 10/31/2019)

YTD ranking196 / 725
1 year294 / 721
3 years129 / 640
5 years121 / 510
10 years16 / 371
Morningstar categoryMorningstar Small Blend Category

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 10/31/2019)

YTD ranking237 / 941
1 year390 / 934
3 years131 / 830
5 years148 / 676
10 years15 / 491
Lipper classificationLipper Small-Cap Core Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark and peer group

Russell 2000® Index (view definition)

Morningstar Small Blend Category (view definition)

Lipper Small-Cap Core Funds Average (view definition)

Additional information