Delaware Healthcare Fund


Delaware Healthcare Fund seeks maximum long-term capital growth through capital appreciation.


The Fund typically invests in companies that develop, produce, or distribute products related to the healthcare or medical industries and derive a substantial portion of their sales from products and services in the healthcare industry. The Fund invests in U.S. and non-U.S. companies across all market capitalizations.

Fund information
Inception date09/28/2007
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 (05/31/2016)

as of quarter-end (03/31/2016)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-1.06%-1.79%15.16%15.42%n/a17.44%09/28/2007
Russell 3000 Healthcare Index-1.99%-5.62%15.73%16.58%n/a10.97%
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-6.41%-2.20%16.34%15.81%n/a17.05%09/28/2007
Russell 3000 Healthcare Index-7.05%-7.62%15.51%17.25%n/a10.50%

Returns for less than one year are not annualized.

Benchmark lifetime returns are as of the month end after the Fund's inception date.

Prior to January 28, 2010, the Fund had not engaged in a broad distribution effort of its shares and had been subject to limited redemption requests. The returns reflect expense limitations that were in effect during certain periods and which may have been lower than the Fund's current expenses. The returns would have been lower without expense limitations.

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 05/31/2016Russell 3000 Healthcare Index
Number of holdings76464
Market cap (median)$4.30 billion$0.74 billion
Market cap (weighted average)$55.19 billion$98.13 billion
Portfolio turnover (last fiscal period, 3/31/15)146%n/a
Beta (relative to Russell 3000 Healthcare Index) (view definition)0.90n/a
Annualized standard deviation, 3 years (view definition)14.14n/a

1The portfolio turnover shown above reflects the Fund's portfolio turnover for the period Nov. 1, 2014 through March 31, 2015. During the period, The Fund changed its fiscal year end to March 31, 2015.

Portfolio composition as of 05/31/2016Total may not equal 100% due to rounding.Values in excess of 100% and negative values may appear as the result of certain assets and liabilities.
Domestic equities64.1%
International equities & depositary receipts41.9%
Cash and cash equivalents-6.0%
Top 10 equity holdings as of 05/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holdings based by issuer.
Holding% of portfolio
SINA Corp/China6.9%
Bristol-Myers Squibb Co6.6%
Eli Lilly & Co5.8%
Chugai Pharmaceutical Co Ltd4.6%
GlaxoSmithKline PLC4.2%
Quest Diagnostics Inc3.7%
Pfizer Inc3.2% Inc3.0%
Boston Scientific Corp2.9%
Total % Portfolio in Top 10 holdings52.8%

Equity sectors as of 05/31/2016

List excludes cash and cash equivalents.

Blue chip medical products54.6%0.0%
Healthcare services12.6%0.0%
Small/mid-cap medical products7.7%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. 

Liu-Er Chen

Liu-Er Chen, CFA

Senior Vice President, Chief Investment Officer — Emerging Markets and Healthcare

Start date on the Fund: September 2007

Years of industry experience: 20

(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 fees0.85%
Distribution and service (12b-1) feesnone
Other expenses0.26%
Total annual fund operating expenses1.11%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.11%

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

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Delaware Healthcare Fund Quarterly commentary March 31, 2016

Within the Fund

Healthcare stocks declined sharply during the first quarter of 2016 as shares of many biotechnology and specialty pharmaceutical companies sold off. In particular, Canadian drug-maker Valeant dominated the healthcare industry headlines during the quarter over concerns that included overpricing of its medications and the departure of its CEO.

During the first quarter, Delaware Healthcare Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the Russell 3000® Healthcare Index. The Fund benefited from both favorable asset allocation and security selection versus the benchmark.

Among sectors, the Fund’s holdings in biotechnology contributed the most to relative performance due to positive stock selection. The Fund’s overweight position in Dyax outperformed after Shire acquired the company. Additionally, underweight positions in Alexion Pharmaceuticals and Alkermes were positive for the Fund in terms of asset allocation, as both of these companies underperformed the benchmark. This performance was somewhat mitigated, however, by the Fund’s overweight stance in ImmunoGen, which succumbed to the broad selloff of small-cap biotechnology companies this quarter. However, we believe that Immunogen’s product pipeline, including its late-stage antibody-drug therapy, remains promising.

Other non-healthcare stocks that contributed to performance included Tim Participacoes in Brazil. Shares of the company benefited from currency appreciation and positive sentiment towards Brazilian equities as a whole. The ongoing investigation into money laundering and corruption, dubbed “Operation Car Wash,” appears to have further weakened the political standing of President Dilma Rousseff, raising the likelihood of policy changes and potentially her resignation.

Elsewhere, in the small-, mid-cap medical products sectors, the Fund’s underweight position in Allergan was favorable in terms of asset allocation. Shares of the company declined on speculation that its reverse buyout deal with Pfizer would be called off. In addition, Allergan delayed divesting its generic drug unit to Teva Pharmaceutical. These gains were negated, however, by the Fund’s overweight positions in Mylan and Morphosys. Shares of Mylan declined in sympathy with other specialty pharmaceutical companies. However, we believe that the company’s fundamentals remain intact and that it is trading at a discount to its intrinsic value. The Fund’s holding of Morphosys, based in Germany and specializing in biotechnology and the development and research of antibodies, declined during the quarter. Shares fell after its fourth-quarter earnings estimates were revised downward. We believe Morphosys is poised for further growth as the company plans to broaden its proprietary pipeline and increase spending on drug developments in 2016.

The Fund’s holdings in the blue-chip medical products sector detracted the most from performance. A significant underweight position in Johnson & Johnson also was unfavorable for the Fund. Shares of J&J rose on speculation that the company will acquire medical-device manufacturer Stryker. Additionally, J&J’s psoriasis drugs, Remicade and Stelara, experienced strong demand. The Fund’s overweight position in U.K.-based GlaxoSmithKline was a bright spot, however. Shares of the company rose after announcing a deal in December to acquire Bristol-Myers Squibb’s HIV portfolio.


Despite the struggles that healthcare equities experienced in the quarter, long-term performance of the sector remains positive. Healthcare has been one of the better-performing sectors within the S&P 500® Index over the past several years. Several events transpired that have shaped our view as we enter 2016:

  • The Affordable Care Act (ACA). The insurance exchanges created by the ACA, now entering its third year, witnessed enrollment rise to 8.3 million by December 2015. Although the success of the ACA is mixed and debated, it appears that the healthcare industry has responded well. There are still plenty of unknowns related to the ACA, and we will be monitoring developments closely, paying attention to any implications for asset prices.
  • Manufacturers of brand-name drugs were challenged as patents expired. Patent expiration means that successful brand-name drugs started losing ground to generic formulations. This has been an important shift, because brand-name drugs produced by companies like Bristol-Myers Squibb and Amgen (to name just two) have long enjoyed impressive sales records and a significant share of their respective markets. Such firms will continue to face so-called “patent cliffs.”

In light of factors like those above, we continue putting a premium on disciplined, intensive research when analyzing investment opportunities for the Fund. We favor companies that exhibit such traits as: 

  • proven competitiveness,
  • seasoned management teams, and
  • stock valuations that are discounted meaningfully from our estimates of intrinsic value.

These characteristics are part of our daily considerations as we follow our conservative, stock-by-stock approach to portfolio management.

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the U.S. stock market.

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.


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.

Healthcare companies are subject to extensive government regulation and their profitability can be affected by restrictions on government reimbursement for medical expenses, rising costs of medical products and services, pricing pressure, and malpractice or other litigation.

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.

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

“Nondiversified” funds may allocate more of their net assets to investments in single securities than “diversified” funds. Resulting adverse effects may subject these funds to greater risks and volatility.

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 06/24/2016)

Institutional ClassPriceNet change
Max offer price$18.36n/a

Total net assets (as of 05/31/2016)

$459.9 million all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 05/31/2016)
RatingNo. of funds
3 Yrs3125
5 Yrs3116
Morningstar categoryHealth

(View Morningstar disclosure)

Lipper ranking (as of 05/31/2016)

YTD ranking15 / 91
1 year9 / 89
3 years40 / 82
5 years44 / 72
10 yearsn/a
Lipper classificationHealth/Biotech Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 3000® Healthcare Index (view definition)

Lipper Health/Biotechnology Funds Average (view definition)

Additional information