Delaware Core Plus Bond Fund


Delaware Core Plus Bond Fund seeks maximum long-term total return, consistent with reasonable risk.


The Fund invests at least 50% of its net assets in domestic (U.S.) investment grade debt securities. The Fund may also invest up to 30% of its net assets in high yield securities and up to 30% of its net assets in foreign securities.

Fund information
Inception date08/16/1985
Dividends paid (if any)Monthly
Capital gains paid (if any)December
Fund identifiers
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
Payroll DeductionYes

On Sept. 25, 2014, Class B shares of the Fund converted to Class A shares.

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 (09/30/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)0.50%1.56%1.66%3.34%5.06%6.08%08/16/1985
Max offer price-4.00%-3.01%0.12%2.40%4.57%5.91%
Barclays U.S. Aggregate Index1.13%2.94%1.71%3.10%4.64%n/a
Average annual total return as of quarter-end (09/30/2015)
Current quarterYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)0.42%0.50%1.56%1.66%3.34%5.06%6.08%08/16/1985
Max offer price-4.14%n/a-3.01%0.12%2.40%4.57%5.91%
Barclays U.S. Aggregate Indexn/a1.13%2.94%1.71%3.10%4.64%n/a

Returns for less than one year are not annualized.

Class A shares have a maximum up-front sales charge of 4.50% and are subject to an annual distribution fee.

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

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Nov. 28, 2014 through Nov. 30, 2015. Additionally, the Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992. All Class A shares currently bear 12b-1 fees at the same rate, the blended rate based on the formula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Fund's Board of Trustees.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
Portfolio characteristics - as of 09/30/2015
Number of holdings735
Effective maturity (weighted average) (view definition)7.32 years
Effective duration (weighted average) (view definition)5.87 years
Annualized standard deviation, 3 years (view definition)3.27
SEC 30-day yield with waiver (view definition)2.11%
SEC 30-day yield without waiver (view definition)1.80%
Portfolio turnover (last fiscal year)313%
Portfolio composition as of 08/31/2015Total may not equal 100% due to rounding.
Mortgage-backed securities35.9%
U.S. government securities11.3%
Asset-backed securities7.6%
Municipal bonds1.1%
Top 10 holdings as of 09/30/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Us Treasury N/B 1.625 7/31/20207.8%
United States Treasury Note/Bond 3.000 5/15/20452.8%
United States Treasury Note/Bond 2.125 5/15/20252.7%
FNCL AS55961.7%
FNR 2011-80 CB1.6%
United States Treasury Note/Bond 2.000 8/15/20251.2%
FNCL AX53160.9%
AMXCA 2012-4 A0.9%
Total % Portfolio in Top 10 holdings26.8%

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

Top sectors as of 08/31/2015
List excludes cash and cash equivalents.
Sector% of portfolio
MBS and CMOs29.6%
Investment grade credits28.7%
High yield credits11.2%
U.S. treasury securities9.1%
Asset-backed securities7.6%
Commercial mortgage-backed securities6.3%
Emerging markets3.8%
Municipal bonds1.1%
International developed0.3%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
Return of

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.

Roger Early

Roger A. Early, CPA, CFA

Managing Director, Head of Fixed Income Investments, Executive Vice President, Co-Chief Investment Officer — Total Return Fixed Income Strategy, President and Chief Executive Officer — Delaware Investments® Family of Funds

Start date on the Fund: May 2007

Years of industry experience: 39

(View bio)

Paul Grillo

Paul Grillo, CFA

Senior Vice President, Co-Chief Investment Officer — Total Return Fixed Income Strategy

Start date on the Fund: February 1997

Years of industry experience: 34

(View bio)

Craig Dembeck

Craig C. Dembek, CFA

Senior Vice President, Co-Head of Credit Research, Senior Research Analyst

Start date on the Fund: December 2012

Years of industry experience: 21

(View bio)

J. David Hillmeyer

J. David Hillmeyer, CFA

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: November 2011

Years of industry experience: 22

(View bio)

Paul Matlack

Paul A. Matlack, CFA

Senior Vice President, Senior Portfolio Manager, Fixed Income Strategist

Start date on the Fund: December 2012

Years of industry experience: 30

(View bio)

John McCarthy

John P. McCarthy, CFA

Senior Vice President, Co-Head of Credit Research, Senior Research Analyst

Start date on the Fund: December 2012

Years of industry experience: 28

(View bio)

Christopher Testa

Christopher M. Testa, CFA

Senior Vice President, Senior Portfolio Manager

Start date on the Fund: June 2014

Years of industry experience: 29

(View bio)

You may qualify for sales-charge discounts if you and your family invest, or agree to invest in the future, at least $100,000 in Delaware Investments® Funds. More information about these and other discounts is available from your financial advisor, in the Fund's statutory prospectus under the section entitled "About your account," and in the Fund's statement of additional information (SAI) under the section entitled "Purchasing Shares."

The following table 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 price4.50%
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.55%
Distribution and service (12b-1) fees0.25%
Other expenses0.38%
Total annual fund operating expenses1.18%
Fee waivers and expense reimbursements(0.28%)
Total annual fund operating expenses after fee waivers and expense reimbursements0.90%

1The Fund's investment manager, Delaware Management Company (Manager), has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) in order to prevent total annual fund operating expenses from exceeding 0.65% of the Fund's average daily net assets from Nov. 28, 2014 through Nov. 30, 2015. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund. Additionally, the Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992. All Class A shares currently bear 12b1-fees at the same rate, the blended rate based on the forumula described above. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Fund's Board of Trustees.

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Delaware Core Plus Bond Fund Quarterly commentary June 30, 2015


During the second quarter of 2015, fixed income markets experienced significant setbacks as rates rose across the yield curve — both in Treasurys and other global sovereigns — and spreads widened in several key sectors. Intermediate and long maturities led the rate rise as liquidity was a problem at times, especially for sovereign bonds. With regulatory blockages, a shrinking repo market, smaller capital commitments at many key trading counterparties, and ongoing market volatility, liquidity will likely continue to be a periodic challenge. Past experience shows that liquidity-based market setbacks tend to be sharp but brief without the sustained impact of deteriorating fundamentals. During the quarter, the Federal Reserve pointed to slightly more upbeat growth conditions and relatively balanced risks while seemingly heading toward an initial rate increase in the second half of 2015. This “most likely” Fed scenario still seems potentially off track since it would come despite recent U.S. dollar strength, lower commodity prices, and below-target inflation statistics. Rarely has the Fed begun to tighten in the face of these factors.

While the “liftoff date” for the initial rate hike has been the policy question of the year, the trajectory of any increases is quickly becoming the more important focus. It seems highly probable that the Fed will raise rates in an unusually gradual way during its next tightening cycle. The Fed’s caution may be based on the continued struggle to break out of the “muddle along” 2%-plus recovery, but it may also be driven by its recognition that other factors have already started the tightening process, such as the stabilization of its balance sheet and the strength of the U.S. dollar. Recently, economic forecasters have begun talking about U.S. growth accelerating into the 2.0–2.5% range in the second half of 2015. If those projections turn out to be accurate, the Fed has good reason to be cautious. The Fed’s own forecasts should also be a warning, as members of the Federal Open Market Committee (FOMC) recently reduced their 2015 gross domestic product (GDP) forecast to a range of 1.8–2.0%, while sticking with their 2015 inflation outlook of 0.6–0.8%.

Domestic economic indicators were mixed during the quarter. In the labor market, initial jobless claims remained below 300,000 and manufacturing activity surpassed consensus expectations. However, the weak Purchasing Managers’ Index (PMI) number in June raised the possibility of a loss of momentum entering into the third quarter. Conversely, consumer demand and housing statistics provided a boost in sentiment. Those positives were further supported by the U.S. Commerce Department’s revised first-quarter GDP estimate showing a 0.2% contraction (compared with the previous estimate’s 0.7% drop), perhaps supporting speculation that port delays and harsh winter weather had affected growth. Second-quarter data showed the economy expanding again, but at a pace softer than forecasters were anticipating following the winter slowdown. Supporting a cautionary tone, core inflation rose less than forecasted during the second quarter, a sign that it may take more time to meet the Fed’s inflation goal.

Although the June FOMC meeting took on a more dovish tone, the Fed nonetheless maintained its policy target range of zero to 0.25%. Also, the FOMC was more specific in describing its criteria for raising rates: “further improvement in the labor market” (even though the unemployment rate is now back to spring 2008 levels) and convincing evidence that inflation (which has been running below target) is likely heading back to 2%.

During the second quarter of 2015, yields on 10-year Treasurys rose from 1.92% to 2.35%, and yields on 2-year Treasurys rose from 0.56% to 0.65%. Rates rose steadily during the quarter, at times with great volatility. The 3-month T-bill / 10-year T-note curve steepened 45 basis points to 2.34% by the end of the quarter (a basis point equals a hundredth of a percentage point). The 1-month London interbank offered rate (Libor) remained essentially unchanged for the period, ending the quarter at 0.18%. (Data: Bloomberg.)

The Barclays U.S. Aggregate Index recorded a negative return in the second quarter as even the poor returns from Treasury securities turned out to be better than those from corporate bonds. Financials were stronger than other investment grade sectors, with utilities significantly underperforming. U.S. dollar emerging market bonds and asset-backed securities (ABS) produced modest positive returns for the period.

Within the Fund

Delaware Core Plus Bond Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the Barclays U.S. Aggregate Index, for the quarter.

  • The Fund’s underweight positions in Treasury securities had a negative impact on relative returns, as Treasury bonds outperformed other benchmark sectors. Our focus on intermediate to longer maturities detracted from returns due to yield curve steepening.
  • Government-backed mortgage-backed securities (MBS) outperformed the benchmark during the quarter. The Fund's slight underweight in MBS and our security-specific positioning had a slightly negative effect on relative performance. ABS outperformed the benchmark, as we maintained our emphasis on short-maturity and floating-rate issues. Commercial mortgage-backed securities (CMBS) had a positive effect on relative performance based on our overweight and security-specific selection.
  • The Fund’s exposure to the high yield market had a positive effect on relative performance, given that the sector outperformed the benchmark for the quarter. The Fund’s investments in bank loans also positively influenced performance.
  • Positions in emerging market debt had a positive impact on the Fund’s relative performance for the quarter, as U.S. dollar–based issues outperformed the benchmark return.
  • Non-dollar developed markets, while representing only a small allocation, produced negative results during the quarter.


Our broad investment concern is the current disconnect between below-trend global economic growth and the quantitative easing–induced rise in financial asset values. Though the ultimate reconnection will most likely come through a sharp decline in asset values (we believe fundamentals will prevail), predicting its timing is beyond difficult and carries its own risks. While bond markets will certainly feel the adjustment, stock markets will probably be at the center of the move.

Interestingly, a number of “outside the box” market factors are warning that this decline in asset values could come in the near future. In no particular order, U.S. equity markets have recently seen a meaningful reduction in the level of new highs while an old — but frequently worthy indicator — shows that the Dow Jones Industrial Average recently reached new highs while transports were making new lows. “Confirmation” is critical in momentum-based markets and now may be waning. Also, while the Shanghai Stock Exchange Composite Index has sustained an almost 20% pullback after a historic rally, the Japanese yen recently broke through key support and could be headed to much weaker levels. The connection here, of course, is that economic growth in China (and Asia as a whole) would be hurt by a further sharp decline in the yen. Finally, despite the apparent bounce in U.S. economic statistics over the past two months, a “relative to expectations” statistic, the Citigroup Economic Surprise Index, is pointing to weakness in U.S. data. In this very uncertain and volatile market environment, our goal is to position client portfolios with prudent levels of risk — levels that are reasonable and sustainable during market dislocations so that we can respond to market setbacks not by panic selling, but by opportunistic buying.

International investments entail risks not ordinarily associated with U.S. 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.

Mortgage-backed securities are fixed income securities that represent pools of mortgages, with investors receiving principal and interest payments as the underlying mortgage loans are paid back. Many are issued and guaranteed against default by the U.S. government or its agencies or instrumentalities, such as Freddie Mac, Fannie Mae, and Ginnie Mae. Others are issued by private financial institutions, with some fully collateralized by certificates issued or guaranteed by the U.S. government or its agencies or instrumentalities.

The Purchasing Managers’ Index or PMI, published by Markit Group, measures the health of the manufacturing sector.

The Dow Jones Industrial Average is an often-quoted market indicator that comprises 30 widely held blue-chip stocks.

The Shanghai Stock Exchange Composite Index tracks the daily price performance of all A-shares and B-shares listed on the Shanghai Stock Exchange.

The Citigroup Economic Surprise Index is a rolling measure of beats and misses of indicators relative to consensus expectations.


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.

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 800 523-1918. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

Fixed income securities and bond funds can lose value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuer’s ability to make interest and principal payments on its debt.

The Fund may also be subject to prepayment risk, the risk that the principal of a fixed income security that is held by the Fund may be prepaid prior to maturity, potentially forcing the Fund to reinvest that money at a lower interest rate.

High yielding, noninvestment grade bonds (junk bonds) involve higher risk than investment grade bonds.

The high yield secondary market is particularly susceptible to liquidity problems when institutional investors, such as mutual funds and certain other financial institutions, temporarily stop buying bonds for regulatory, financial, or other reasons. In addition, a less liquid secondary market makes it more difficult for the Fund to obtain precise valuations of the high yield securities in its portfolio.

The Fund may invest in derivatives, which may involve additional expenses and are subject to risk, including the risk that an underlying security or securities index moves in the opposite direction from what the portfolio manager anticipated. A derivative transaction depends upon the counterparties’ ability to fulfill their contractual obligations.

International investments entail risks not ordinarily associated with U.S. 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.

If and when the Fund invests in forward foreign currency contracts or uses other investments to hedge against currency risks, the Fund will be subject to special risks, including counterparty risk.

The Fund may experience portfolio turnover in excess of 100%, which could result in higher transaction costs and tax liability.

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

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 10/08/2015)

Class APriceNet changeYTD
Max offer price$8.79n/an/a

Total net assets (as of 09/30/2015)

$131.5 million all share classes

Lipper ranking (as of 09/30/2015)

YTD ranking71 / 210
1 year85 / 210
3 years108 / 190
5 years98 / 167
10 years43 / 89
Lipper classificationCore Plus Bond Funds

(View Lipper disclosure)

Benchmark, peer group

Barclays U.S. Aggregate Index (view definition)

Lipper Core Plus Bond Funds Average (view definition)

Additional information