Delaware Small Cap Core Fund


Delaware Small Cap Core Fund seeks long-term capital appreciation.


The Fund invests in stocks of small companies believed to have a combination of attractive valuations, growth prospects, and strong cash flows.

Fund information
Inception date12/29/1998
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers

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)-7.68%-7.54%9.64%10.12%5.94%9.85%12/29/1998
Average annual total return as of quarter-end (12/31/2015)
Current quarter1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.71%-3.35%14.65%11.87%7.62%10.42%12/29/1998
Russell 2000 Index3.59%-4.41%11.65%9.19%6.80%n/a

Returns for less than one year are not annualized.

Prior to Aug. 1, 2005, the Fund had not engaged in a broad distribution effort of its shares and had been subject to limited redemption requests. 12b-1 fees were waived for this period. Had 12b-1 fees been applied, performance would have been lower. Expense waivers were in effect for the periods shown. Performance would have been lower if waivers did not apply.

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
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return

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

Portfolio characteristics - as of 01/31/2016
Number of holdings136
Market cap (median)$1.53 billion
Market cap (weighted average)$1.89 billion
Portfolio turnover (last fiscal year)38%
Beta, 3 years (relative to Russell 2000 Index) (view definition)0.94
Annualized standard deviation, 3 years (view definition)14.21
Portfolio composition as of 01/31/2016Total may not equal 100% due to rounding.
Domestic equities95.0%
Cash and cash equivalents3.3%
International equities & depositary receipts1.6%
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
j2 Global Inc.1.3%
Tyler Technologies Inc.1.2%
G-III Apparel Group Ltd.1.2%
Casey's General Stores Inc.1.2%
West Pharmaceutical Services Inc.1.2%
Sovran Self Storage Inc.1.1%
Kite Realty Group Trust1.1%
DCT Industrial Trust Inc.1.1%
NorthWestern Corp.1.1%
Popeyes Louisiana Kitchen Inc.1.1%
Total % Portfolio in Top 10 holdings11.6%

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

Top sectors as of 01/31/2016
List excludes cash and cash equivalents.
Sector% of portfolio
Capital goods9.2%
Basic materials6.5%
Business services5.7%
Consumer services4.4%
Consumer discretionary3.7%
Consumer staples2.6%
Distribution history - annual distributions (Institutional Class)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.

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

A blended approach

The Core Equity team blends growth and value stocks from across the small-cap universe. Learn more about the team’s differentiated stock-selection process. [Runtime: 2:29]

Watch the video

Read video transcriptRead video transcriptRead video transcript

Francis X. Morris

Francis X. Morris 

Senior Vice President, Chief Investment Officer — Core Equity

Start date on the Fund: November 2004

Years of industry experience: 32

(View bio)

Chris Adams

Christopher S. Adams, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 27

(View bio)

Mike Morris

Michael S. Morris, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 23

(View bio)

Donald Padilla

Donald G. Padilla, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 29

(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 fees0.75%
Distribution and service (12b-1) feesnone
Other expenses0.32%
Total annual fund operating expenses1.07%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.07%

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

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Delaware Small Cap Core Fund Quarterly commentary December 31, 2015

Within the Fund

For the fourth quarter of 2015, Delaware Small Cap Core Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the Russell 2000® Index. The sectors that most significantly contributed to outperformance were technology, finance, and energy. Stock selection in the healthcare sector was the largest detractor as this was the strongest-performing sector in the Index during the quarter. Stock selection in the consumer services and basic materials sectors also detracted from relative returns.

Broadly speaking, the Fund’s holdings in the healthcare sector appreciated 4.8%, while those in the Index gained 9.8%. Within the sector, a number of holdings contributed to the Fund’s outperformance during the quarter, including Acorda Therapeutics and Ligand Pharmaceuticals.

Acorda Therapeutics is a biotechnology company that specializes in therapies for neurological diseases, particularly multiple sclerosis (MS). Acorda’s MS drug, Ampyra, continues to outsell expectations, which contributed to the stock’s 61% gain during the quarter. We maintain a favorable outlook for Acorda as the company continues to progress with trials of Ampyra for the treatment of other neurological diseases.

Biotechnology company Ligand Pharmaceuticals develops programs that lead to licensing deals or acquires royalty revenue-generating assets with biotechnology and pharmaceutical companies. Ligand announced a number of new licensing deals, in addition to positive partner developments during the quarter, which helped contribute to the stock’s gain of 27%. We continue to favor shares of Ligand based on its diversified business model, multiple drug development partnerships, and what we see as an attractive pipeline of potential new drugs.

Granite Construction is a full-service general contractor and construction materials producer that specializes in infrastructure projects serving the transportation, industrial, and federal markets. The company’s stock appreciated 45% during the quarter on positive news from Washington D.C. and a strong project pipeline. In December, President Obama signed into law a five-year $300 billion highway bill, Fixing America’s Surface Transportation (FAST) Act. The FAST Act is expected to create a number of infrastructure projects which Granite Construction’s business has the potential to benefit from. We remain positive on Granite Construction based on its existing pipeline and forward-looking opportunities.

Among detractors, the consumer discretionary sector showed weakness, particularly the performance of apparel companies. G-III Apparel Group is a retailer and wholesaler of outerwear, dresses, sportswear, swimwear, and accessories. The company has a diverse portfolio of brands. Shares of G-III declined 28% during the quarter as unseasonably warm weather is expected to force markdowns, which may hurt the company’s sales and margins. The company reported a strong third quarter even in the challenging market environment. We remain positive on G-III as the company has a diversified mix of brands in different consumer industries with the potential to benefit from trends.

Shares of another apparel company, Boot Barn Holdings, declined 33% during the quarter. Boot Barn is a lifestyle retail chain devoted to western apparel, footwear, and accessories. The pullback is partially a result of concerns about an oil-driven slowdown at the company’s stores that have exposure to that industry. While the company is experiencing a slowdown in sales in certain markets, we continue to believe in the company’s longer-term growth potential. Additionally, the recently completed acquisition of the company’s third largest competitor, Sheplers, could provide earnings accretion.

While stock selection in the technology sector was strong, among individual stocks, FARO Technologies detracted. FARO Technologies makes 3D documentation tools, laser scanners, and portable coordinate measuring machines that are used throughout the world in multiple industrial end markets. The stock declined 29% during the quarter as the company reported slowing sales. Our outlook for the company is no longer positive and, as a result, we exited the position.


Consumer confidence remains high, gasoline prices are low, and wage growth and household net worth are strong. As we have discussed before, we need to see top-line growth which depends on consumer and corporate spending. We believe the unsettled macroeconomic environment continues to render U.S. equities an active manager’s market, in which outperformance can be generated through thorough company-by-company analysis.

As the calendar flips to 2016, we reiterate that our investment strategy, process, and philosophy remain unchanged. The Funds largest overweight sectors going into 2016, are capital goods, finance, basic materials, and technology. The Fund remains underweight the yield sensitive sectors like real estate investment trusts (REITs) and utilities. We intend to focus our research efforts on identifying what we view as great companies that we believe offer sustainable competitive advantages, strong balance sheets, healthy cash flows, and high-quality management teams, and that have the potential to outperform over the cycle.


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.

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

Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.

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.

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 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 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 02/08/2016)

Institutional ClassPriceNet changeYTD
Max offer price$16.54n/an/a

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

$941.2 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 01/31/2016)
RatingNo. of funds
3 Yrs5639
5 Yrs5564
10 Yrs4367
Morningstar categorySmall Blend

(View Morningstar disclosure)

Lipper ranking (as of 01/31/2016)

YTD ranking503 / 868
1 year340 / 801
3 years24 / 685
5 years19 / 607
10 years86 / 396
Lipper classificationSmall-Cap Core Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 2000® Index (view definition)

Lipper Small-Cap Core Funds Average (view definition)

Additional information