Delaware Value® Fund

Objective

Delaware Value® Fund seeks long-term capital appreciation.

Strategy

The Fund invests in large-capitalization companies, seeking consistent long-term performance. The Fund follows a traditional value-oriented investment philosophy using a research-intensive approach.

Fund information
Inception date09/15/1998
Dividends paid (if any)Quarterly
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDDVIX
CUSIP24610C857

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 (07/31/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.35%6.49%17.56%17.49%7.87%7.71%09/15/1998
Russell 1000 Value Index-0.18%6.40%17.11%15.08%6.79%n/a
Average annual total return as of quarter-end (06/30/2015)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-1.67%0.13%4.97%17.28%18.63%8.09%7.67%09/15/1998
Russell 1000 Value Index0.11%-0.61%4.13%17.34%16.50%7.05%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
Gross0.74%
Net0.74%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20151.83%-1.67%n/an/an/a
20142.79%5.51%1.74%3.05%13.69%
201312.24%3.91%4.47%9.52%33.44%
20128.25%-0.42%4.79%1.35%14.48%
20117.86%1.71%-12.91%14.23%9.14%
20103.75%-9.68%12.60%9.96%16.03%
2009-10.67%10.53%11.45%7.03%17.77%
2008-9.70%-5.74%-8.79%-13.55%-32.88%
20070.45%6.44%-2.85%-6.39%-2.77%
20066.33%0.34%8.44%7.07%23.88%
20051.85%0.00%3.82%0.00%5.74%

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

Portfolio characteristics - as of 07/31/2015
Number of holdings34
Market cap (median)$41.38 billion
Market cap (weighted average)$76.05 billion
Portfolio turnover (last fiscal year)7%
Beta, 3 years (relative to Russell 1000 Value Index) (view definition)0.84
Annualized standard deviation, 3 years (view definition)7.97
Portfolio composition as of 07/31/2015Total may not equal 100% due to rounding.
Domestic equities98.8%
Cash and cash equivalents1.2%
Top 10 holdings as of 07/31/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Mondelez International Inc.3.4%
Raytheon Co.3.3%
CVS Health Corp.3.3%
Waste Management Inc.3.2%
Edison International3.2%
Northrop Grumman Corp.3.2%
Pfizer Inc.3.1%
Allstate Corp.3.1%
Xerox Corp.3.1%
Bank of New York Mellon Corp.3.1%
Total % Portfolio in Top 10 holdings32.0%

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

Top sectors as of 07/31/2015
List excludes cash and cash equivalents.
Sector% of portfolio
Health Care21.5%
Consumer Staples12.8%
Energy12.3%
Financials12.2%
Information Technology12.1%
Industrials9.8%
Consumer Discretionary6.1%
Telecommunication Services6.0%
Utilities3.2%
Materials2.9%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20150.0000.157
20140.0000.289
20130.0000.258
20120.0000.199
20110.0000.221
20100.0000.202
20090.0000.209
20080.0000.279
20070.6500.274
20060.2240.223
20050.0710.152

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. 

The process is our star

The Large-Cap Value team at Delaware Investments discusses why a fundamental research-driven process, with roots going back to the 1970s, is the true star of the team.

Watch the video

Read video transcript

Ty Nutt

Ty Nutt  

Senior Vice President, Senior Portfolio Manager, Team Leader

Start date on the Fund: July 2004

Years of industry experience: 32

(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)


Nik Lalvani

Nikhil G. Lalvani, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: October 2006

Years of industry experience: 18

(View bio)


Anthony Lombardi

Anthony A. Lombardi, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2004

Years of industry experience: 26

(View bio)


Bob Vogel

Robert A. Vogel Jr., CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2004

Years of industry experience: 23

(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 fees0.54%
Distribution and service (12b-1) feesnone
Other expenses0.20%
Total annual fund operating expenses0.74%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.74%

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

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Delaware Value® Fund Quarterly commentary June 30, 2015

Within the Fund

For the second quarter of 2015, Delaware Value Fund (Institutional Class shares and Class A shares at net asset value) posted a negative return and underperformed its benchmark, the Russell 1000® Value Index. At the portfolio level, stock selection accounted for all of the shortfall.

Investments in industrials and healthcare caused the largest drags on relative returns. In industrials, Waste Management fared the worst with a decline of -13.9%. The company reported lower-than-expected revenue for the first quarter of 2015 (primarily because of lower prices for recycling commodities) and lowered its earnings-per-share guidance for the year. We continue to believe that Waste Management has an attractive risk/reward profile. In healthcare, drug and medical products distributor Cardinal Health was the laggard in the group, falling -6.9%. Given the stock’s strong performance over the past several quarters, the decline was likely due, in part, to profit taking. Also, recent merger speculation involving several large health insurers seems to have created some uncertainty around potential winners and losers in related industries. Elsewhere in the portfolio, shares of document technology and services provider Xerox dropped -16.7%. In late April, the company announced disappointing quarterly results and reduced its outlook for revenue and earnings for the year. Despite recent execution challenges, Xerox remains an attractive, long-term investment opportunity, in our view.

The Fund’s investments in consumer staples and energy contributed the most to relative performance. Global snack and beverage maker Mondelez International was the Fund’s strongest performer in the sector, up 14.4%. The company’s most recent quarterly results came in ahead of expectations, owing to higher prices and better expense management. In energy, exploration and production company Occidental Petroleum led the way, advancing 7.6%. The company’s shares appeared to benefit from positive comments from several analysts, the relative strength of its assets and balance sheet, and the rise in oil prices during the quarter. The strongest performer among all the Fund’s portfolio holdings was semiconductor manufacturer Broadcom, up 19.2%.

In June, we sold the Fund’s position in Broadcom. We first added Broadcom to the portfolio in July 2013. The shares had been underperforming because of weakness in enterprise technology spending, an investment-related earnings drag, stiff competition in Broadcom’s baseband chip business, and concerns about a slowdown in mobile handset sales. The company’s valuation and balance sheet attributes were attractive, in our view. Broadcom was the Fund’s strongest-performing technology stock during our two-year holding period, and it outpaced the return of the technology sector and benchmark, overall. Share gains were helped, in part, by Broadcom’s decision to wind down its faltering baseband chip business and its agreement to be acquired by Avago Technologies in a deal valued at $37 billion in cash and stock (Broadcom’s shares rose 21% on the day of the announcement). We voted to sell Broadcom because it was near our price target, had a low-single-digit free cash flow yield, and would soon be domiciled outside the United States.

The proceeds from the Broadcom sale were used to buy a target weight position in Express Scripts, the largest pharmacy benefits manager (PBM) in the U.S. The company’s clients include health plans, employers, and government health programs. PBMs play an important role in the healthcare system, delivering cost savings while simultaneously improving health outcomes. PBMs can achieve client savings through a variety of means including purchasing scale, formulary management, improved drug regimen adherence, and promotion of lower cost solutions (including generic drugs and mail delivery). Express Scripts had a history of strong growth. However, following its 2012 acquisition of rival Medco Health Solutions, it experienced a period of weak client retention due to integration-related disruptions. In 2013, following these disruptions, the stock began consistently qualifying in our opportunity screen. It had a BBB+ credit rating from Standard & Poor’s, an improving debt position, relatively low capital intensity, and consistent free cash flow. The team believed there were a number of important trends that could help drive its business, including: rising demand for prescription drugs based on an aging U.S. population, increasing use of prescription medications to treat chronic diseases, growing generic usage (more profitable for PBMs) and a strong generic pipeline through 2020, and the pervasive focus on cost containment in healthcare.

Outlook

It wouldn’t surprise us if the U.S. stock market traded in a broad range in the coming years. A number of countervailing forces could keep market levels in check. On the positive side, U.S. capital markets continue to offer relative stability and the domestic economy appears on track to continue its modest expansion. Corporate balance sheets remain strong, supporting the return of capital to shareholders through buybacks and dividends. Furthermore, a boom in mergers-and-acquisitions activity appears to be underway as companies look to deploy idle cash and access new sources of growth. We believe some of the challenges facing the stock market include the prospect of higher short-term interest rates in the U.S.; slowing global gross domestic product (GDP) growth and the weaker overall demand that comes with it; high levels of indebtedness, globally; falling productivity in the U.S. and evidence of higher wage growth (a negative for profit margins); and, foremost in our minds, its rich valuation.

Our belief is that annualized equity market returns will likely be below average, in the mid-single-digit range, looking out five to seven years. Because of this, we’re maintaining a somewhat defensive posture in the Fund’s portfolio, emphasizing companies that, in our view, appear to have more predictable cash flows and earnings, sound balance sheets, and less potential downside volatility. Healthcare still has the largest target weighting in the portfolio, now 21% with the addition of Express Scripts. We are continually striving to cheapen the portfolio, seeking what we see as undervalued stocks to replace more fully-valued holdings. Currently, we’re looking at ideas in the consumer discretionary, consumer staples, and information technology sectors.

Document must be used in its entirety.

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

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.

[14810]

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.

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.

Because the Fund expects to hold a concentrated portfolio of a limited number of securities, the Fund's risk is increased because each investment has a greater effect on the Fund's overall performance.

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 08/31/2015)

Institutional ClassPriceNet changeYTD
NAV$17.25-0.09-4.57%
Max offer price$17.25n/an/a

Total net assets (as of 07/31/2015)

$9.0 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 07/31/2015)
RatingNo. of funds
Overall51192
3 Yrs41192
5 Yrs51052
10 Yrs5741
Morningstar categoryLarge Value

(View Morningstar disclosure)

Lipper ranking (as of 07/31/2015)

YTD ranking222 / 526
1 year263 / 510
3 years123 / 446
5 years2 / 390
10 years19 / 290
Lipper classificationLarge-Cap Value Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 1000® Value Index (view definition)

Lipper Large-Cap Value Funds Average (view definition)

Additional information