Delaware Dividend Income Fund


Delaware Dividend Income Fund seeks to provide high current income and an investment that has the potential for capital appreciation.


The Fund invests primarily in income generating securities (debt and equity), which may include equity securities of large, well-established companies, and debt securities, including high yield, high-risk corporate bonds, investment grade fixed income securities, and U.S. government securities.

Fund information
Inception date12/02/1996
Dividends paid (if any)Monthly
Capital gains paid (if any)November or 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 (03/31/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.48%6.70%11.47%10.65%6.65%8.30%12/02/1996
Max offer price-4.35%0.52%9.28%9.34%6.02%7.95%
S&P 500 Index0.95%12.73%16.11%14.47%8.01%n/a
Average annual total return as of quarter-end (03/31/2015)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.48%1.48%6.70%11.47%10.65%6.65%8.30%12/02/1996
Max offer price-4.35%-4.35%0.52%9.28%9.34%6.02%7.95%
S&P 500 Index0.95%0.95%12.73%16.11%14.47%8.01%n/a

Returns for less than one year are not annualized.

Class A shares have a maximum up-front sales charge of 5.75% and are subject to an annual distribution fee.

Expense ratio
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
Portfolio characteristics - as of 03/31/2015
Number of holdings445
Market cap (median)$9.70 billion
Market cap (weighted average)$74.74 billion
Portfolio turnover (last fiscal year)56%
Beta (relative to S&P 500 Index) (view definition)0.61
Annualized standard deviation, 3 years (view definition)6.24
SEC 30-day yield with waiver (view definition)2.17%
SEC 30-day yield without waiver (view definition)2.17%
Portfolio composition as of 03/31/2015Total may not equal 100% due to rounding.
Large cap value52.8%
High yield bonds17.6%
Convertible securities11.0%
Cash and cash equivalents10.3%
Real estate6.3%
Top 10 holdings as of 03/31/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Kraft Foods Group Inc.2.0%
Quest Diagnostics Inc.1.6%
Cardinal Health Inc.1.4%
Johnson Controls Inc.1.4%
Allstate Corp.1.4%
Lowe's Cos. Inc.1.4%
Raytheon Co.1.4%
Verizon Communications Inc.1.4%
CA Inc.1.4%
Pfizer Inc.1.4%
Total % Portfolio in Top 10 holdings14.8%

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

Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment

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.

Bob Zenouzi

Bob Zenouzi 

Senior Vice President, Chief Investment Officer — Real Estate Securities and Income Solutions (RESIS)

Start date on the Fund: May 2006

Years of industry experience: 28

(View bio)

Damon Andres

Damon J. Andres, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: December 1996

Years of industry experience: 24

(View bio)

Wayne Anglace

Wayne A. Anglace, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: March 2010

Years of industry experience: 17

(View bio)

Kristen Bartholdson

Kristen E. Bartholdson 

Vice President, Senior Portfolio Manager

Start date on the Fund: December 2008

Years of industry experience: 14

(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: 20

(View bio)

Ned Gray

Ned A. Gray, CFA

Senior Vice President, Chief Investment Officer — Global and International Value Equity

Start date on the Fund: March 2011

Years of industry experience: 28

(View bio)

Nik Lalvani

Nikhil G. Lalvani, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: October 2006

Years of industry experience: 18

(View bio)

Anthony Lombardi

Anthony A. Lombardi, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: March 2005

Years of industry experience: 26

(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: 29

(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)

Ty Nutt

Ty Nutt  

Senior Vice President, Senior Portfolio Manager, Team Leader

Start date on the Fund: March 2005

Years of industry experience: 32

(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: 28

(View bio)

Bob Vogel

Robert A. Vogel Jr., CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: March 2005

Years of industry experience: 23

(View bio)

You may qualify for sales-charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Delaware Investments® Funds. More information about these and other discounts is available from your financial advisor, in the Fund's 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 price5.75%
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.64%
Distribution and service (12b-1) fees0.25%
Other expenses0.21%
Total annual fund operating expenses1.10%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.10%

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Delaware Dividend Income Fund Quarterly commentary December 31, 2014

Within the Fund

For the fourth quarter of 2014, Delaware Dividend Income Fund (Class A and Institutional Class shares at net asset value) underperformed its benchmark, the S&P 500® Index.

Within the large-cap value equity portion of the Fund, sector allocations detracted from relative performance while stock selection was additive. However, stock selection in the energy sector had a large negative effect on returns. The Fund’s five energy sector holdings, which are broadly exposed to oil exploration and production, lagged by a wide margin in the fourth quarter. The Fund’s modest overweight in the sector also hurt performance. Services provider Halliburton, down -38.8% in the fourth quarter, had the largest decline of any stock in the Fund. Healthcare investments were also a notable source of negative attribution for the quarter. The Fund’s stock selection did not keep pace with the sector. Shares of pharmaceutical maker Merck underperformed the most in the quarter, falling -3.5%.

Investments in the consumer discretionary sector made the largest contribution to relative performance within the large-cap value equity portion of the Fund, led by home improvement retailer Lowe’s, up 30.6%. In November, Lowe’s reported solid results for its most recent quarter and raised its estimates for full-year earnings per share and operating margin. Stock selection in the industrials sector was another meaningful contributor to the fourth quarter’s relative returns. Northrop Grumman (up 12.4%) continued to perform well despite downward pressure on defense spending, and benefited from several sell-side analyst upgrades during the quarter.

Within the equity real estate investment trust (REIT) portion of the Fund, allocations to the office, specialty, and freestanding sectors detracted from Fund performance during the quarter. In the freestanding sector, American Realty Capital Properties (which we exited during the quarter) revealed an accounting problem in late October, and the stock declined more than 20%. Accounting irregularities involving a small amount of deferred expenses triggered the selloff, but investor sentiment was already waning given the company’s aggressive acquisition program and ongoing corporate-governance issues.

Stock selection in the industrial, healthcare, and mixed REIT sectors aided Fund performance. Health Care REIT gained more than 20% and Healthcare Trust of America, a medical office REIT, gained more than 15%. The healthcare sector has continued to benefit from lower yields.

Within the Fund’s high yield bond portion, the top sector contributors were media, leisure, and consumer goods, while the leading individual contributors were DS Services (mineral water), Cablevision Systems (cable TV), and The Pantry (convenience stores). DS Services gained on the closing of its acquisition by Cott Corporation, Cablevision Systems gained on strong third-quarter cash flow generation, and The Pantry gained on news of its acquisition by Couche-Tard.

Sectors that detracted on a relative basis during the fourth quarter were energy, healthcare, and telecommunications. Bottom individual names were Midstates Petroleum (energy exploration and production), Key Energy (oilfield services), and SandRidge Energy (energy E&P). Midstates, Key Energy, and SandRidge all declined due to the nearly 50% drop in oil prices since mid-June.


Moving into the first quarter of 2015, several notable themes, possibilities, and developments bear monitoring. These include the following:

  • Looking out three to five years, we are cautious about the prospects for equities, but optimistic about the shares of what we view as higher-quality companies that are trading below their long-term average valuation multiples. While we think annualized total returns for U.S. equities during this period will be below average, it’s our belief that these returns — likely in the mid-single-digit range — should be competitive versus other asset classes. Chief among our concerns is the valuation of the U.S. stock market. It looks fully valued to us across a broad range of price multiples including those based on earnings, sales, cash flows, book value, and dividend yield. In energy, we are patiently re-evaluating the Fund’s current holdings in light of new opportunities that are starting to present themselves.
  • Our approach is to identify real estate companies that have the potential to generate increasing cash flows and prudently raise capital. The REIT industry can provide stability of cash flow, while the capital markets decide what multiple to place on that cash flow. We look at historical valuations for long-term guidance when the market becomes overly enthusiastic or turns severely negative with certain sectors. We believe that, over the long term, investment decisions should be made not on the movement of interest rates but on the characteristics of companies that enable them to add value. Given investors’ current thirst for yield at any price, we choose to base our investment decisions on valuation and on our belief that, fundamentally, interest rates are not the final arbiter of value.
  • The collapse in the price of oil has a number of implications for the high yield market. First, it should help anchor inflation and give the U.S. Federal Reserve cover to remain patient on rates, while also providing a modest stimulus to consumer spending. This supports a moderate, noninflationary growth outlook that is positive overall for profits and stocks, and benign for interest rates. Historically, these conditions have been constructive for high yield bonds. However, sustained low oil prices also will mean depressed energy sector profits and capital spending, and for overleveraged high yield energy names, particularly smaller companies with less financial flexibility and/or less attractive asset bases, this will likely mean a rise in defaults. Assuming the economy stays on the course described above, we believe we are likely to see significant value in nonenergy sectors of the high yield market and, selectively, among specific energy names with the capitalization and flexibility to ride out this stage of the cycle.

In light of these circumstances, we believe there is a strong argument for seeking companies that, in our view, have most or all of the following characteristics: they (1) appear undervalued, (2) have strong cash flows, (3) maintain manageable debt levels, (4) operate diversified businesses, and (5) have a history of delivering consistent dividends.

Book value is the net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

Diversification may not protect against market risk.


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.

The Fund may invest up to 45% of its net assets in high yield, higher-risk corporate bonds.

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.

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.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 04/17/2015)

Class APriceNet changeYTD
Max offer price$14.71n/an/a

Total net assets (as of 03/31/2015)

$813.8 million all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 03/31/2015)

Load waivedWith loadNo. of funds
3 Yrs43787
5 Yrs43697
10 Yrs32444
Morningstar categoryModerate Allocation

(View Morningstar disclosure)

Lipper ranking (as of 03/31/2015)

YTD ranking344 / 594
1 year107 / 522
3 years43 / 372
5 years31 / 231
10 years32 / 116
Lipper classificationFlexible Portfolio Funds

(View Lipper disclosure)

Benchmark, peer group

S&P 500® Index (view definition)

Lipper Flexible Portfolio Funds Average (view definition)

Additional information