Delaware Dividend Income Fund

Objective

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

Strategy

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
NASDAQDDIIX
CUSIP24610B404

Institutional Class shares are only available 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 (01/31/2016)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-2.96%-4.18%5.76%7.04%5.40%7.70%12/02/1996
Average annual total return as of quarter-end (12/31/2015)
Current quarter1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.56%-2.40%8.23%8.13%6.04%7.91%12/02/1996
S&P 500 Index7.04%1.38%15.13%12.57%7.31%n/a

Returns for less than one year are not annualized.

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
Gross0.85%
Net0.85%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20151.46%-1.85%-5.37%3.56%-2.40%
20142.67%4.34%-0.60%1.63%8.22%
20138.11%1.40%3.21%6.06%20.00%
20127.59%-0.51%4.31%2.05%13.93%
20115.92%0.45%-11.34%8.49%2.34%
20104.10%-5.70%8.72%6.61%13.78%
2009-3.61%15.66%14.78%6.88%36.76%
2008-6.30%-2.96%-8.23%-18.88%-32.31%
20071.81%1.98%-1.50%-5.82%-3.69%
20065.68%0.23%6.01%6.71%19.84%

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

Portfolio characteristics - as of 01/31/2016
Number of holdings426
Market cap (median)$9.53 billion
Market cap (weighted average)$72.21 billion
Portfolio turnover (last fiscal year)67%
Beta, 3 years (relative to S&P 500 Index) (view definition)0.65
Annualized standard deviation, 3 years (view definition)7.43
SEC 30-day yield with waiver (view definition)n/a
SEC 30-day yield without waiver (view definition)n/a
Portfolio composition as of 01/31/2016Total may not equal 100% due to rounding.
Large cap value49.1%
High yield bonds19.7%
Cash and cash equivalents11.4%
Convertible securities9.8%
Real estate6.3%
Other3.7%
Top 10 holdings as of 01/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
United States Treasury Note/Bond 2.250 11/15/20254.1%
FNCL AS00162.1%
Microsoft Corp.1.6%
CA Inc.1.4%
Johnson & Johnson1.4%
Raytheon Co.1.4%
Xerox Corp.1.4%
Edison International1.4%
Mondelez International Inc.1.3%
Verizon Communications Inc.1.3%
Total % Portfolio in Top 10 holdings17.4%

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

Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20160.0000.017
20150.0000.361
20140.0000.375
20130.0000.310
20120.0000.383
20110.0000.378
20100.0000.394
20090.0000.420
20080.0000.530
20070.3360.505
20060.0610.444

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 only available to certain investors. See the prospectus for more information. 

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: 29

(View bio)


Damon Andres

Damon J. Andres, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: December 1996

Years of industry experience: 25

(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: 15

(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)


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: 29

(View bio)


Nik Lalvani

Nikhil G. Lalvani, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: October 2006

Years of industry experience: 19

(View bio)


Anthony Lombardi

Anthony A. Lombardi, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: March 2005

Years of industry experience: 27

(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: 29

(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: 33

(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)


Bob Vogel

Robert A. Vogel Jr., CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: March 2005

Years of industry experience: 24

(View bio)


Institutional Class shares are only available 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 fees0.64%
Distribution and service (12b-1) feesnone
Other expenses0.21%
Total annual fund operating expenses0.85%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.85%

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

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Delaware Dividend Income Fund Quarterly commentary December 31, 2015

Overview

Equity markets globally rebounded from a volatile third quarter with most developed markets recording gains. The S&P 500® Index was up 7.0% while the MSCI EAFE Index rallied 4.7%. Real estate investment trusts (REITs), as measured by the FTSE NAREIT Equity REITs Index, outperformed with a 7.3% gain.

Credit markets did not participate, however, as high yield bonds, emerging markets, and commodities continued their selloff. High yield bonds, as represented by the J.P. Morgan Domestic High Yield Index, returned -2.8% during the fourth quarter, marking the third consecutive quarterly loss for the asset class and bringing 2015 returns to -5.0%. The U.S. convertible market, as measured by the BofA Merrill Lynch All U.S. Convertibles Index, finished the quarter up slightly, at 0.6%.

Heading into 2016, however, it appeared that equities were succumbing to the weaker global environment presaged by the credit markets.

Within the Fund

For the fourth quarter of 2015, Delaware Dividend Income Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the S&P 500 Index.

  • The Fund’s investments in large-cap value equities, which was approximately 40% of the portfolio, contributed most to relative returns during the quarter. Stock selection was the main driver of outperformance; sector allocations were also a source of positive attribution.
  • The Fund’s position in high yield bonds was a source of negative attribution during the quarter. The Fund is focused on the B and BB rating tiers, and on underweighting CCC-rated bonds. Within sectors, we are avoiding the energy space, significantly underweighting industrial commodities, and focusing instead on defensive and/or fundamentally positive sectors such as healthcare, financial services, and media.
  • The Fund’s convertibles allocation had a negative effect on relative performance due to adverse security selection in the telecommunications, healthcare, and industrial sectors.
  • The Fund’s REIT investments also detracted from relative performance. On average, the Fund’s investments in this asset class trailed that of the S&P 500 Index during the period.
  • The Fund’s international value equity allocation also hurt relative performance as non-U.S. securities trailed the U.S. broad market in the fourth quarter.

Outlook

Going into 2016, our goal is to continue maintaining a certain degree of defensiveness while maintaining our process of investing in different income-generating asset classes, taking positions up and down the capital structure, and seeking opportunities across multiple geographies. We believe this approach has the potential to provide a yield that is competitive with fixed income securities (with better upside potential) while providing a premium yield to equities (with better downside protection). We also believe this approach makes sense for some investors because it may help them establish a plan to (1) meet the essentials of their daily lives, (2) live according to their preferred lifestyles, and (3) maintain a cushion for the unexpected.

The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization weighted index designed to measure equity market performance of developed markets, excluding the United States and Canada.

The FTSE NAREIT Equity REITs Index measures the performance of all publicly traded equity real estate investment trusts (REITs) traded on U.S. exchanges, excluding timber and infrastructure REITs.

The J.P. Morgan Domestic High Yield Index is designed to mirror the investable universe of the U.S.-dollar domestic high yield corporate debt market.

The BofA Merrill Lynch All U.S. Convertibles Index tracks the performance of domestic corporate convertible bonds and convertible preferred stock issues of all qualities that have a market value of $50 million or more at issuance.

Bond ratings are determined by a nationally recognized statistical rating organization.

Per Standard & Poor’s credit rating agency, bonds rated below AAA are more susceptible to the adverse effects of changes in circumstances and economic conditions than those in higher-rated categories, but the obligor’s capacity to meet its financial commitment on the obligation is still strong. Bonds rated BBB exhibit adequate protection parameters, although adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitments. Bonds rated BB, B, and CCC are regarded as having significant speculative characteristics, with BB indicating the least degree of speculation of the three.

[15890]

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 800 362-7500. 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, non-investment-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.

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

The Funds are distributed by Delaware Distributors L.P., an affiliate of Delaware Management Holdings, Inc., and Macquarie Group Limited.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 02/05/2016)

Institutional ClassPriceNet changeYTD
NAV$12.35-0.09-4.50%
Max offer price$12.35n/an/a

Total net assets (as of 01/31/2016)

$685.2 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 01/31/2016)
RatingNo. of funds
Overall4860
3 Yrs4860
5 Yrs4742
10 Yrs3501
Morningstar categoryModerate Allocation

(View Morningstar disclosure)

Lipper ranking (as of 01/31/2016)

YTD ranking358 / 669
1 year101 / 570
3 years42 / 426
5 years29 / 272
10 years15 / 123
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