Delaware Select Growth Fund*

Objective

Delaware Select Growth Fund seeks long-term capital appreciation.

Strategy

The Fund invests in companies of any size or market capitalization that are believed to have long-term capital appreciation potential and are expected to grow faster than the U.S. economy.

Fund information
Inception date08/28/1997
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQVAGGX
CUSIP928931757

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)-8.11%-5.62%7.06%9.66%6.95%7.51%08/28/1997
Average annual total return as of quarter-end (12/31/2015)
Current quarter1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)6.78%-0.21%12.10%11.89%8.09%8.04%08/28/1997
Russell 3000 Growth Index7.09%5.09%16.62%13.30%8.49%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
Gross1.00%
Net1.00%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20153.55%0.81%-10.47%6.78%-0.21%
2014-1.16%3.51%-3.10%7.98%7.05%
20138.22%1.04%10.66%8.96%31.84%
201217.73%-5.09%4.47%-0.97%15.60%
20119.84%2.27%-11.17%7.93%7.70%
20106.29%-6.16%15.14%10.23%26.58%
20090.53%23.34%15.57%9.80%57.35%
2008-9.16%-3.86%-14.85%-24.91%-44.16%
20070.62%3.83%7.45%-2.11%9.89%
20063.84%-7.57%-1.46%7.38%1.55%

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

Portfolio characteristics - as of 01/31/2016
Number of holdings67
Market cap (median)$14.47 billion
Market cap (weighted average)$84.96 billion
Portfolio turnover (last fiscal year)46%
Beta, 3 years (relative to Russell 3000 Growth Index) (view definition)1.04
Annualized standard deviation, 3 years (view definition)13.07
Portfolio composition as of 01/31/2016Total may not equal 100% due to rounding.
Domestic equities91.5%
International equities & depositary receipts9.1%
Cash and cash equivalents-0.6%
Top 10 holdings as of 01/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
QUALCOMM Inc.4.9%
Microsoft Corp.4.9%
Celgene Corp.4.8%
Allergan plc4.5%
Zebra Technologies Corp.4.5%
Biogen Inc.3.8%
PayPal Holdings Inc.3.4%
Valeant Pharmaceuticals International Inc.3.1%
Sally Beauty Holdings Inc.2.7%
Alphabet Inc.2.4%
Total % Portfolio in Top 10 holdings39.0%
Top sectors as of 01/31/2016
List excludes cash and cash equivalents.
Sector% of portfolio
Technology27.9%
Consumer discretionary23.3%
Healthcare21.3%
Financial services18.2%
Producer durables5.9%
Consumer staples1.9%
Utilities1.5%
Energy0.5%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20160.0000.000
20159.7200.000
20145.7790.216
20131.7770.000
20120.0000.000
20110.0000.000
20100.0000.000
20090.0000.000
20080.0000.000
20070.0000.000
20060.0000.000

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. 

Investment manager

Delaware Management Company, a series of Delaware Management Business Trust

Sub-advisor

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 2005

Years of industry experience: 35

(View bio)


Chris Bonavico

Christopher J. Bonavico, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2005

Years of industry experience: 28

(View bio)


Ken Broad

Kenneth F. Broad, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2005

Years of industry experience: 27

(View bio)


Chris Ericksen

Christopher M. Ericksen, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: July 2007

Years of industry experience: 21

(View bio)


Ian Ferry

Ian D. Ferry 

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: January 2013

Years of industry experience: 11

(View bio)


Patrick Fortier

Patrick G. Fortier, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2005

Years of industry experience: 20

(View bio)


Greg Heywood

Gregory M. Heywood, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: August 2006

Years of industry experience: 22

(View bio)


Daniel J. Prislin, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: May 2005

Years of industry experience: 21

(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 fees0.72%
Distribution and service (12b-1) feesnone
Other expenses0.28%
Total annual fund operating expenses1.00%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.00%

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

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Delaware Select Growth Fund* Quarterly commentary December 31, 2015

Within the Fund

For the fourth quarter of 2015, Delaware Select Growth Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the Russell 3000® Growth Index. Strong relative performance in the financial services and technology sectors was partially offset by weak relative performance in the healthcare and producer durables sectors.

Heartland Payment Systems contributed to the Fund’s performance during the quarter. The stock rose sharply after it was announced that Global Payments would be acquiring Heartland Payment Systems in a stock and cash deal. The combined entity would result in one of the largest electronic payment solution providers for approximately 2.5 million merchants globally. On a standalone basis, we continue to believe Heartland is well-positioned to benefit from the secular global trend of payment transactions moving from paper-based currency to electronic transactions. However, while we believe the two combined businesses could complement each other and provide increased scale, we are currently accessing what the merged company means for the Fund over the long-term.

Baidu contributed to the Fund’s performance during the quarter. The company reported relatively strong financial results, and also announced its plan to enter China’s online banking industry through a strategic partnership to potentially capitalize on Baidu’s massive existing user base. While the company continues to show progress in its mobile-related services, its heavy capital investments into various business segments and its attempt to expand geographically should continue to affect margins and earnings in the near term. We agree with Baidu’s heavy investment spending strategy and continue to believe the company stands to benefit significantly from the proliferation of wireless and streaming technologies in China, making the company’s services even more accessible. We feel the company has upside potential given the sheer size of the Chinese market population, along with ancillary businesses that are becoming significant drivers of growth (including social media, multimedia sharing services, and mobile search).

Microsoft was a contributor to performance during the quarter. The company reported better than expected financial results and forward guidance. While the company may experience weakness in its legacy “Windows” business (as emergence of smartphones and tablets has led to declining PC shipments as well as variability in the IT spending cycle), it continues to make meaningful progress towards a gradual shift to cloud based technology. We believe this transition should be beneficial as its software could be better utilized across multiple platforms. Furthermore, this shift to more cloud-based products moves customers from a “seat license” software model to a “subscription” cloud-based model — this should lead to more consistent, stable revenue streams with increased recurring revenues.

Pandora Media detracted from the Fund’s performance during the quarter. The company reported weaker-than-expected results and reported that Apple’s new streaming service may pose a threat to future growth. Additionally, during the quarter Pandora announced the acquisition of Rdio assets, demonstrating to us that the industry is consolidating despite the increased competition. In mid-December, the Copyright Royalty Board decided the outstanding case between Pandora and artists regarding payment rates. The decision was viewed as favorable to Pandora — the rates were lower than consensus believed they would be and, more importantly, the decision provides cost certainty for the next five years. While there are ongoing concerns about increased competition in the streaming music service environment, we continue to believe Pandora holds a commanding lead for the ad-supported streaming radio segment, which drives network effect efficiencies, especially around listener data. Terrestrial radio advertising is a $17 billion business in the United States alone, and we anticipate that Pandora could benefit over the long-term as these ad revenues migrate to dominant streaming radio platforms like Pandora. It is an audio version of our video thesis on Netflix from over a decade ago — personalized streaming that enables data-driven content presentation is the future.

Zebra Technologies also detracted from performance during the quarter. After strong price appreciation during the first half of the year, the stock continued to experience weakness as the company reported somewhat mixed financial results and forward guidance. While costs associated with the acquisition of the Motorola Solutions enterprise business continue to weigh down current financial results, we believe this acquisition, which was the catalyst for our initial purchase of the company, should lead to meaningful cost and product synergies. The acquisition gives Zebra a more diversified product offering, helps strengthen its competitive position, and increases its market share. Additionally, we continue to believe the acquired technology from this business should allow the company to offer enhanced next-generation products.

Qualcomm was a detractor from performance during the quarter. The company's patent licensing business reported lingering negotiating issues with handset makers in China and a new flare-up in South Korea. While these issues continue to affect sentiment, we do not believe they materially threaten the company’s business model over the long term. We also believe its mobile chip business should rebound, as it recovers from 2015 product cycle issues that are unlikely to recur. Additionally, we are encouraged by the aggressive steps that management is taking to run the business in a much more efficient way, which should aide not only free cash generation but also capital structure.

Outlook

Despite positive absolute returns in the equity market during recent years, we believe the ever-changing market sentiment demonstrates that there are more than just fundamental factors affecting stock prices. A lack of confidence in the fundamental outlook suggests to us that many investors appear to be struggling with accurately predicting the pace of global economic recovery and are assessing external factors that threaten economic fundamentals (for example, central bank actions and fiscal policy debates around the globe). While some fundamentals in various geographies may be trending in a positive direction (from a very low base during the global financial crisis in 2008–2009), we don’t believe we are entering into a typical post-recessionary global boom cycle. Rather, we believe the lingering effects of the credit crisis could lead to moderate growth, at best, for the intermediate term. In such a tenuous environment, we believe the quality of a company’s business model, competitive position, and management may prove to be of utmost importance.

Regardless of the economic outcome, we remain consistent in our long-term investment philosophy: We want to own what we view as strong secular-growth companies with solid business models and competitive positions that we believe can grow market share and have the potential to deliver shareholder value in a variety of market environments.

[15922]

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.

*Effective after the close of business on June 8, 2012, Delaware Select Growth Fund was closed to new investors. Existing shareholders of the Fund; certain retirement plans and IRA transfers and rollovers from these plans; and certain advisory or fee-based programs sponsored by and/or controlled by financial intermediaries where the financial intermediary has entered into an arrangement with the Fund’s Distributor or transfer agent (mutual fund wrap accounts) may continue to purchase shares. Please read the latest prospectus and the summary prospectus for more information concerning this event.

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

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.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

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 02/10/2016)

Institutional ClassPriceNet changeYTD
NAV$35.230.30-14.76%
Max offer price$35.23n/an/a

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

$731.6 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 01/31/2016)
RatingNo. of funds
Overall31546
3 Yrs21546
5 Yrs31325
10 Yrs3936
Morningstar categoryLarge Growth

(View Morningstar disclosure)

Lipper ranking (as of 01/31/2016)

YTD ranking328 / 655
1 year421 / 622
3 years457 / 543
5 years188 / 459
10 years87 / 317
Lipper classificationMulti-Cap Growth Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 3000® Growth Index (view definition)

Lipper Multi-Cap Growth Funds Average (view definition)

Additional information