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 (08/31/2016)

as of quarter-end (06/30/2016)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)8.53%7.76%9.99%14.56%7.70%10.52%12/29/1998
Russell 2000 Index10.23%8.59%8.53%12.85%7.04%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)3.20%-4.53%9.85%10.27%6.87%10.24%12/29/1998
Russell 2000 Index3.79%-6.73%7.09%8.35%6.20%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 08/31/2016Russell 2000 Index
Number of holdings1341,978
Market cap (median)$2.01 billion$0.73 billion
Market cap (weighted average)$2.18 billion$1.85 billion
Portfolio turnover (last fiscal year)38%n/a
Beta (relative to Russell 2000 Index) (view definition)0.93n/a
Annualized standard deviation, 3 years (view definition)14.09n/a
Portfolio composition as of 08/31/2016Total may not equal 100% due to rounding.
Domestic equities95.8%
International equities & depositary receipts2.3%
Cash and cash equivalents1.8%
Top 10 equity holdings as of 08/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Barnes Group Inc.1.2%
Proofpoint Inc.1.2%
Minerals Technologies Inc.1.2%
Granite Construction Inc.1.2%
Neenah Paper Inc.1.1%
Tenneco Inc.1.1%
ESCO Technologies Inc.1.1%
j2 Global Inc.1.1%
Webster Financial Corp.1.1%
ExlService Holdings Inc.1.0%
Total % Portfolio in Top 10 holdings11.3%

Equity sectors as of 08/31/2016

List excludes cash and cash equivalents.

Capital goods10.2%0.0%
Basic materials7.9%0.0%
Business services5.9%0.0%
Consumer services3.8%0.0%
Consumer discretionary2.7%0.0%
Consumer staples2.3%0.0%
Communications services1.3%0.0%
Credit cyclicals1.1%0.0%
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 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: 33

(View bio)

Chris Adams

Christopher S. Adams, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: November 2004

Years of industry experience: 28

(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 fees0.73%
Distribution and service (12b-1) feesnone
Other expenses0.29%
Total annual fund operating expenses1.02%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.02%

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 June 30, 2016

Within the Fund

For the second quarter of 2016, Delaware Small Cap Core Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the Russell 2000® Index.

The most significant detractor from performance was stock selection within the capital goods sector which outperformed, particularly among engineering and construction companies. Stock selection in the consumer discretionary sector detracted, led even lower by the Fund’s holdings within the apparel industry. Utilities stocks performed strongly during the quarter, while stock selection and an underweight to the sector detracted. Adding to performance was stock selection in the healthcare, technology, and energy sectors.

Within the technology sector, semiconductor company Synaptics detracted from performance. The company disclosed that it will eliminate approximately 160 employee positions, which represents a 9% reduction in staff. The CEO and other executives voluntarily requested salary reductions. This occurred after the company missed earnings. The company trades at an attractive valuation and continues to repurchase its shares. We believe its products are unique and are growing in use for smartphones.

The retailing landscape remained troubled during the second quarter, and portfolio holding Express was not immune. The company’s stock declined 32% during the quarter. Comparable same-store sales declined slightly; however, in our view, the outlook for the company remains strong as it is trading at an attractive valuation and has a long-term plan from management.

Another consumer company that detracted during the quarter was quick-casual restaurant operator Fiesta Restaurant Group, which operates Pollo Tropical and Taco Cabana. The company’s stock declined 33% during the quarter as it missed earnings expectations. Much of the miss can be attributed to flooding in certain markets where the company operates, which reduced restaurant traffic (particularly in Texas). We continue to favor shares of Fiesta Restaurant Group as we believe the company has a unique concept and an attractive valuation.

The strongest contributor to performance from a stock selection perspective came from the healthcare sector. Biotechnology company Tesaro appreciated 91% during the quarter. Much of the stock’s appreciation came after the company reported positive results from its Phase III NOVA trial of its ovarian cancer maintenance treatment, Niraparib. We maintained the Fund’s position as we believe this positive news should continue to work in the company’s favor.

Within the technology sector of the Fund, four holdings were acquired during the quarter. Ruckus Wireless appreciated by more than 30% on April 4 as the company announced that Brocade had entered into a definitive agreement to acquire Ruckus in a cash and stock transaction, valuing the company at $1.5 billion. We exited the position before the quarter ended.

inContact appreciated by more than 50% on May 18. The company announced that it had agreed to be acquired by NICE Systems in an all-cash deal. inContact provides cloud contact center software solutions. This deal will position NICE Systems as the first end-to-end customer service solutions provider in the cloud and will allow the company to reach a larger customer base. We reduced the Fund’s position after the announcement.

SciQuest, which develops and wholesales procurement software solutions, appreciated by more than 30% on May 31. The company announced that a joint venture between Accel Partners and Kohlberg Kravis Roberts (“Accel-KKR”) had entered into a definitive agreement to acquire SciQuest for $469 million in cash. Under the terms of the agreement, Accel-KKR would pay $17.75 per share in cash for each share held in SciQuest. The offer represents a 34% premium over the stock’s closing price on May 27. The acquisition should allow Accel-KKR to accelerate SciQuest’s growth. We reduced the Fund’s position after the announcement.

Private equity firm Thoma Bravo entered into a definitive agreement to acquire Qlik Technologies for $2.9 billion in cash on June 2. The purchase price represents a 40% premium to the company’s unaffected 10-day average stock price prior to March 3, 2016. The acquisition would allow Thoma Bravo to accelerate Qlik Technologies’ growth and its global market presence.


We would like to see top-line growth for companies, which will partly be dependent on consumer spending. Consumers are saving more of their incomes and have higher expenses on the services side. This combination has dampened spending. Earnings estimates have come in some as companies are more realistic about this low-growth environment. We believe companies will still be penalized for missing earnings. The valuation, as measured by price-to-earnings of the Russell 2000 Index, is at low levels relative to history. Market uncertainty will likely continue through the election cycle.

This market has been driven by higher yielding equities as investors remain on the hunt for yield, particularly as the yield on the 10-year U.S. Treasury has declined. Within the Fund, we have increased real estate investment trust (REIT) holdings and are slightly underweight on a relative basis. The Fund’s largest overweight sectors are capital goods, basic materials, finance, healthcare, and technology. The Fund remains underweight in the yield sensitive utilities sector, as well as consumer discretionary and media.

We will continue to apply our investment process, which focuses on thorough company-by-company analysis and disciplined portfolio construction. 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 with the potential to outperform.


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 09/23/2016)

Institutional ClassPriceNet change
Max offer price$20.74n/a

Total net assets (as of 08/31/2016)

$1.6 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 08/31/2016)
RatingNo. of funds
3 Yrs4657
5 Yrs4561
10 Yrs4386
Morningstar categorySmall Blend

(View Morningstar disclosure)

Morningstar ranking (as of 08/31/2016)

YTD ranking517 / 824
1 year391 / 786
3 years112 / 657
5 years55 / 561
10 years101 / 386
Morningstar categorySmall Blend

(View Morningstar disclosure)

Lipper ranking (as of 08/31/2016)

YTD ranking552 / 869
1 year429 / 844
3 years119 / 714
5 years60 / 615
10 years121 / 424
Lipper classificationSmall-Cap Core Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 2000® Index (view definition)

Morningstar Small Blend Category (view definition)

Lipper Small-Cap Core Funds Average (view definition)

Additional information