Delaware Foundation® Conservative Allocation Fund

Objective

Delaware Foundation Conservative Allocation Fund seeks a combination of current income and preservation of capital with capital appreciation.

Strategy

The Fund invests in a combination of underlying securities, using an active allocation approach and representing a variety of asset classes and investment styles that are managed by the advisor.

Fund information
Inception date12/31/1997
Dividends paid (if any)Quarterly
Capital gains paid (if any)December
Fund identifiers
NASDAQDFIIX
CUSIP245918404

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 (11/30/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)5.80%6.55%8.41%7.60%6.46%5.35%12/31/1997
Barclays U.S. Aggregate Index5.87%5.27%3.00%4.10%4.79%n/a
Average annual total return as of quarter-end (09/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-1.24%3.99%7.59%9.21%7.79%6.54%5.30%12/31/1997
Barclays U.S. Aggregate Index0.17%4.10%3.96%2.43%4.12%4.62%n/a

Returns for less than one year are not annualized.

Expense ratio
Gross1.11%
Net0.88%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Jan. 28, 2014 to Jan. 28, 2015. Please see the fee table in the Fund’s prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20141.64%3.59%-1.24%n/an/a
20133.41%-2.11%3.83%3.46%8.73%
20125.04%-0.67%3.82%1.28%9.71%
20112.94%1.63%-6.60%5.01%2.60%
20103.11%-3.74%7.57%2.99%9.96%
2009-3.48%11.87%11.92%3.99%25.66%
2008-3.22%-2.11%-5.55%-4.07%-14.16%
20071.28%2.32%1.14%-0.34%4.45%
20062.37%-1.21%3.68%3.73%8.76%
2005-0.46%1.85%2.15%0.81%4.40%
20042.17%-1.06%0.95%5.18%7.33%

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

Portfolio characteristics - as of 11/30/2014
Share assets$18.5 million
Number of holdings1,331
Portfolio turnover (last fiscal year)210%
Annualized standard deviation, 3 years (view definition)4.95
SEC 30-day yield with waiver (view definition)2.06%
SEC 30-day yield without waiver (view definition)1.80%
Asset allocations* (as of September 30, 2014)
  Range Strategic policy weight Actual**
Equity asset class (total) 20-50% 40% 39.8%
U.S. equity asset class 5-30% 20% 21.2%
U.S. Large Cap Core     4.5%
U.S. Large Cap Growth     7.1%
U.S Large Cap Value     6.8%
U.S. Small Cap Core     2.8%
International equity asset class 5-30% 15% 12.1%
International Growth     5.2%
International Value     6.9%
Global real estate equity asset class 0-15% 0% 1.4%
U.S. real estate     1.4%
Global ex-U.S. real estate     0.0%
Emerging markets asset class 0-10% 5% 5.1%
Fixed income asset class (total) 50-80% 60% 60.3%
Diversified fixed income asset class 50-80% 60% 60.3%
Diversified fixed income 30-70% 58% 59.8%
Money market / cash equivalents 0-20% 2% 0.5%

*The percentages listed in this chart for "Range," "Strategic policy weight," and "Actual" represent the proportion of the Fund's assets allocated to the portfolio manager responsible for investing in a particular asset class or investment style. Each individual manager is responsible for determining how his or her assets are invested, subject to the constraints outlined in the Fund's prospectus. The "Range" and "Strategic policy weight" are as of the prospectus date.  

**Total may not equal 100% due to rounding.

Top 10 holdings as of 11/30/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Teva Pharmaceutical Industries Ltd.0.5%
Celgene Corp.0.5%
Novartis AG0.5%
Baidu Inc.0.5%
Microsoft Corp.0.4%
Allergan Inc.0.4%
QUALCOMM Inc.0.4%
Visa Inc.0.4%
Toyota Motor Corp.0.3%
MasterCard Inc.0.3%
Total % Portfolio in Top 10 holdings4.2%

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
20140.0000.215
20130.2180.203
20120.0700.223
20110.2620.241
20100.2960.272
20090.0000.283
20080.0000.227
20070.0990.348
20060.0000.286
20050.0000.235
20040.0000.198

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. 

Jackson Square Partners, LLC (JSP) is the sub-advisor to the Fund’s U.S. large-cap growth sleeve. As sub-advisor, JSP is responsible for day-to-day management of its portion of the Fund’s assets. Although JSP serves as sub-advisor, the investment manager, Delaware Management Company, a series of Delaware Management Business Trust, has ultimate responsibility for all investment advisory services with JSP.

Mike Hogan

Michael J. Hogan, CFA

Executive Vice President, Head of Equity Investments

Start date on the Fund: June 2007

Years of industry experience: 27

(View bio)


Paul Grillo

Paul Grillo, CFA

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

Start date on the Fund: September 2008

Years of industry experience: 33

(View bio)


Sharon Hill

Sharon Hill, Ph.D.

Senior Vice President, Head of Equity Quantitative Research and Analytics

Start date on the Fund: September 2008

Years of industry experience: 16

(View bio)


Francis X. Morris

Francis X. Morris 

Senior Vice President, Chief Investment Officer – Core Equity

Start date on the Fund: May 2004

Years of industry experience: 31

(View bio)


Bob Zenouzi

Bob Zenouzi 

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

Start date on the Fund: September 2008

Years of industry experience: 28

(View bio)


Investment manager

Delaware Management Company, a series of Delaware Management Business Trust

Sub-advisors

Jackson Square Partners, LLC


Jeff VanHarte

Jeffrey S. Van Harte, CFA

Chairman, Chief Investment Officer — Jackson Square Partners, LLC

Start date on the Fund: May 2014

Years of industry experience: 34

(View bio)


Chris Bonavico

Christopher J. Bonavico, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2014

Years of industry experience: 26

(View bio)


Chris Ericksen

Christopher M. Ericksen, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2014

Years of industry experience: 20

(View bio)


Daniel J. Prislin, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2014

Years of industry experience: 21

(View bio)


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

Jackson Square Partners, LLC (JSP) is the sub-advisor to the Fund’s U.S. large-cap growth sleeve. As sub-advisor, JSP is responsible for day-to-day management of its portion of the Fund’s assets. Although JSP serves as sub-advisor, the investment manager, Delaware Management Company, a series of Delaware Management Business Trust, has ultimate responsibility for all investment advisory services with JSP.

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 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 fees0.65%
Distribution and service (12b-1) feesnone
Other expenses0.46%
Total annual fund operating expenses1.11%
Fee waivers and expense reimbursements(0.23%)
Total annual fund operating expenses after fee waivers and expense reimbursements0.88%

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

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, 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 0.88% of the Fund's average daily net assets from Jan. 28, 2014 through Jan. 28, 2015. These waivers and reimbursements may only be terminated by agreement of the Manager or Distributor, as applicable, and the Fund.

Delaware Foundation® Conservative Allocation Fund Quarterly commentary June 30, 2014 Class I (DFIIX)

View printable commentary E-mail this page

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

Economic overview

During the third quarter of 2014, business confidence rose modestly, while consumer confidence declined slightly. The Organization for Economic Cooperation and Development (OECD) compiles composite leading indicators to reflect business and consumer confidence for individual member countries and for the whole organization. The most recently available data indicate that during the quarter, business confidence rose in most developed economies, but consumer confidence was generally flat to down. Both business and consumer confidence declined in the euro zone and also in the United Kingdom. The rise in business confidence in the United States was larger than in most other developed countries.

The International Monetary Fund (IMF) maintains and regularly updates a set of short-term forecasts covering the global economy and individual countries and regions. As of the date of this commentary, the most recent IMF projections were those issued in October 2014. The IMF continues to believe that in many developed countries, inflation is low, output gaps are large, and monetary authorities need to continue providing support until economic recovery is fully secure. The IMF noted that while the U.S. has started to grow again, it is still being held back by a slow pace of investment. The IMF also cut sharply its estimates for near-term economic growth in Russia, as a result of what the IMF called “geopolitical tensions.”

Projected economic growth rate 2014 estimate 2015 estimate
Apr 2014 Oct 2014 Apr 2014 Oct 2014
World 3.6% 3.3% 3.9% 3.8%
Advanced economies 2.2% 1.8% 2.3% 2.3%
United States 2.8% 2.2% 3.0% 3.1%
Euro area 1.2% 0.8% 1.5% 1.3%
Japan 1.4% 0.9% 1.0% 0.8%
United Kingdom 2.9% 3.2% 2.5% 2.7%
Emerging and developing economies 4.9% 4.4% 5.3% 5.0%
Brazil 1.8% 0.3% 2.7% 1.4%
China 7.5% 7.4% 7.3% 7.1%
India 5.4% 5.6% 6.4% 6.4%
Russia 1.3% 0.2% 2.3% 0.5%

Source: International Monetary Fund, World Economic Outlook, April 2014 and October 2014

The currency markets experienced considerable fluctuations during the third quarter of 2014. The Funds generally focus on trade-weighted currencies, which represent a composite value relative to each country’s major trading partners. There was a striking increase in the value of the trade-weighted dollar, and equally noteworthy falls in the value of the trade-weighted euro and trade-weighted yen. In general, an economy’s competitiveness tends to be enhanced by currency depreciation, and tends to be impaired by currency appreciation. The strengthening of the U.S. dollar is likely to make imports less expensive for U.S. consumers, but may impair the ability of U.S. exporters to win contracts abroad.

Trade-weighted currency Source 6/30/14 9/30/14 Change
U.S. dollar (USD) U.S. Treasury via Bloomberg 79.8 85.9 +7.7%
Euro (EUR) Bank of England via Bloomberg 95.7 92.7 -3.1%
Sterling (GBP) Bank of England via Bloomberg 87.7 87.8 +0.1%
Japanese yen (JPY) Bank of England via Bloomberg 137.7 131.6 -4.4%

Source: Bloomberg, October 2014

The prices of many commodities dropped during the third quarter of 2014. There were dramatic falls in the Thomson Reuters/CoreCommodity CRB Index and the S&P GSCI® Index, which are both broad commodity indices, and also in the spot prices of crude oil and gold. All else equal, we believe a rise in commodity prices is likely to mean better profits for materials companies, but lower margins for industrials companies.

Category Benchmark 6/30/14 9/30/14 Change
Broad commodities S&P GSCI 658.6 574.3 -12.8%
Broad commodities Thomson Reuters/CoreCommodity CRB Index 308.2 278.6 -9.6%
Crude oil West Texas Intermediate spot 105.37 91.16 -13.5%
Gold New York spot price 1327.32 1208.16 -9.0%

Source: Bloomberg, October 2014

The currently available statistical data suggest that the U.S. economy continued to expand during the quarter. The Federal Reserve’s “beige book” from early September, covering the period ending August 2014, reported that consumer spending and manufacturing had again increased in most districts. The Fed also reported that conditions were improving in both residential and commercial real estate. The Bureau of Labor Statistics (BLS) of the U.S. Commerce Department estimated that the seasonally adjusted U.S. unemployment rate in September 2014 was 5.9%, down from the 6.1% level of June 2014.

Market overview

During the third quarter of 2014, U.S. large-cap growth equities and U.S. fixed-income securities eked out gains, but most other major equity and fixed-income indices generated negative total returns. Among the benchmarks that we regularly follow, U.S. small-cap equities delivered the worst total return, closely followed by developed-market equities. Global fixed income investment grade securities underperformed their U.S. peers during the quarter.

Style Benchmark Index return for 3Q14 (in USD)
U.S. large-cap growth Russell 1000® Growth Index +1.5%
U.S. large-cap value Russell 1000® Value Index -0.2%
U.S. small-cap  Russell 2000® Index  -7.4%
International growth MSCI EAFE Growth Index (gross) -5.5%
International value MSCI EAFE Value Index (gross) -6.1%
Emerging markets MSCI Emerging Markets Index (gross) -3.4%
U.S. fixed income Barclays U.S. Aggregate Index
+0.2%
Global fixed income Barclays Global Aggregate Index
-3.1%

Sources: Bloomberg, Barclays, MSCI, and Russell, October 2014

Within the Funds

The Asset Allocation Committee’s decisions are taken collectively, and the weightings assigned to individual asset classes reflect the consensus of opinion across all members. The Committee’s outlook for developed-market equities continued to decline during the third quarter, resulting in a decision to reduce further the Funds’ active exposure to this asset class. Conversely, the Committee made a tactical decision to remove the underweight position in U.S. small-cap equities, taking the view that these names are now more appealing than earlier in the year. In addition, the Committee continued to partially hedge exposure to global equity markets by means of short positions in equity index futures. The portfolios remain overweight in fixed income securities and emerging market equities, underweight in international growth and international value, and roughly neutral in U.S. equities, though with a greater allocation to the concentrated large-cap growth and large-cap value sleeves.

Relative to strategic policy weights
Asset class Comment Underweight Neutral Overweight
U.S. large-cap core Remain broadly diversified
U.S. large-cap growth Underweight energy, industrials
U.S. large-cap value Underweight financials
U.S. small-cap core Remain broadly diversified
International growth Low active weights by sector and region
International value Underweight financials
Emerging markets Underweight financials
Diversified fixed income Focusing on corporates and selective opportunities in high yield
Cash and cash equivalents Yields continue to be quite low

Notes: The graphic above is based on tactical positions of Delaware Foundation Funds relative to the strategic policy weights for each Fund, with tactical and strategic weights adjusted by total assets under management (AUM) in each Fund, and breakpoints at 0.5%, 1%, and 3%; weights reflect tactical positioning as of Sept. 30, 2014; actual sleeve weights may deviate from tactical weights due to different rates of asset appreciation and other factors; tactical weights may vary from time to time, and Delaware Investments makes no commitment to update this information in a timely manner; tactical weights are provided for information purposes only and should not be construed as asset allocation advice.

The Funds also continued to be underweight in cash, reflecting the low yields currently available for cash-like instruments. Within the equity sleeves, most of the investment teams remained underweight in financial sector stocks during the quarter, reflecting their continued concern about the risks associated with these securities. Conversely, the majority of the equity investment teams continued to be overweight in technology and healthcare during the quarter.

Outlook

As noted above, business sentiment in many developed economies generally improved during the third quarter of 2014. The Committee continues to believe that global economic recovery will likely require consumers to begin spending more freely, and the Fed’s beige book indicates continuing evidence that this is occurring in the U.S. economy, despite falling public-sector expenditures. There is still good reason to be apprehensive about the economic outlook for Europe, where austerity-based policies have generally been associated with deteriorating conditions. There is also some justification for mild concern about the current political situation in the U.S., where certain political actors appear decreasingly willing to maintain the historical commitment to compromise among the different branches of government. However, the Committee continues to believe that the global economy is gradually moving toward more normal conditions.

As described above, the Funds continue to have a slightly defensive position relative to their strategic policy weights. Nevertheless, the Committee continues to believe that the global macroeconomic environment may continue to improve, though probably at a rather slow pace. The market fluctuations of the past few years have tended to confirm the Committee’s view that over the medium term, the Funds’ commitment to global diversification may prove beneficial, as participating in a large number of different markets may help reduce the risk that any single market might deliver disappointing performance during any particular period.

[13375]

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 800 362-7500. Investors should read the prospectus and the summary prospectus carefully before investing.

Investing involves risk, including the possible loss of principal.

This Fund is subject to the same risks as the underlying styles in which it invests.

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.

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.

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.

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

Risk controls and asset allocation models do not promise any level of performance or guarantee against loss of principal. Each Fund has a different level of risk.

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

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.

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 12/19/2014)

Institutional ClassPriceNet changeYTD
NAV$10.970.034.75%
Max offer price$10.97n/an/a

Total net assets (as of 11/30/2014)

$116.4 million all share classes

Lipper ranking (as of 11/30/2014)

YTD ranking91 / 357
1 year93 / 352
3 years82 / 294
5 years74 / 267
10 years8 / 131
Lipper classificationMixed-Asset Target Allocation Conserv

(View Lipper disclosure)

Benchmark, peer group

Barclays U.S. Aggregate Index (view)

Lipper Mixed-Asset Target Allocation Conservative Funds Average (view)

Additional information