Delaware Smid Cap Growth Fund*

Objective

Delaware Smid Cap Growth Fund seeks long-term capital appreciation.

Strategy

The Fund invests primarily in common stocks of growth-oriented companies that its portfolio managers believe have long-term capital appreciation potential and expect to grow faster than the U.S. economy. The portfolio managers particularly seek small to mid-sized companies.

Fund information
Inception date11/09/1992
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDFDIX
CUSIP245906201

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 (04/30/2016)

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

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.27%2.30%12.29%9.96%9.05%10.16%11/09/1992
Russell 2500 Growth Index-1.73%-6.76%9.47%8.23%7.06%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)1.24%2.54%12.71%10.61%8.99%10.19%11/09/1992
Russell 2500 Growth Index-2.66%-9.57%9.25%8.77%6.99%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
Gross0.97%
Net0.97%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20161.24%n/an/an/an/a
20155.94%2.23%-6.54%6.01%7.30%
2014-4.33%0.23%-1.94%9.62%3.09%
201310.41%4.10%10.61%11.06%41.20%
201217.00%-5.99%2.59%-1.94%10.65%
201114.41%3.26%-15.84%8.92%8.28%
20104.86%-1.73%14.72%14.57%35.43%
20090.54%14.93%17.01%7.16%44.89%
2008-13.89%6.23%-13.78%-25.76%-41.44%
20075.01%7.95%2.91%-3.40%12.68%
20069.10%-5.94%-2.94%5.68%5.25%

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

Portfolio characteristics - as of 04/30/2016Russell 2500 Growth Index
Number of holdings291,480
Market cap (median)$3.09 billion$1.05 billion
Market cap (weighted average)$3.83 billion$4.45 billion
Portfolio turnover (last fiscal period, 3/31/15)18%n/a
Beta (relative to Russell 2500 Growth Index) (view definition)0.70n/a
Annualized standard deviation, 3 years (view definition)11.68n/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 04/30/2016Total may not equal 100% due to rounding.
Domestic equities92.2%
Cash and cash equivalents4.3%
International equities & depositary receipts3.5%
Top 10 equity holdings as of 04/30/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Sally Beauty Holdings Inc.6.6%
Equity Commonwealth5.4%
Blackbaud Inc.5.0%
Graco Inc.4.9%
Bio-Techne Corp.4.9%
VeriFone Systems Inc.4.8%
DineEquity Inc.4.7%
Zebra Technologies Corp.4.6%
Dunkin' Brands Group Inc.4.6%
j2 Global Inc.4.2%
Total % Portfolio in Top 10 holdings49.7%

Equity sectors as of 04/30/2016

List excludes cash and cash equivalents.

SectorFundBenchmark
Consumer discretionary28.4%0.0%
Technology21.1%0.0%
Financial services14.2%0.0%
Producer durables12.6%0.0%
Healthcare10.9%0.0%
Utilities4.2%0.0%
Energy4.2%0.0%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20160.0000.000
20153.0080.000
20144.1220.000
20131.0790.000
20121.5820.000
20110.9460.000
20100.9380.263
20090.0000.000
20081.6920.000
20072.7520.000
20061.6040.000

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 (a Delaware statutory trust)

Sub-advisor

Jackson Square Partners, LLC


Chris Bonavico

Christopher J. Bonavico, CFA

Portfolio Manager, Equity Analyst — Jackson Square Partners, LLC

Start date on the Fund: January 2010

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: January 2010

Years of industry experience: 27

(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 fees0.71%
Distribution and service (12b-1) feesnone
Other expenses0.26%
Total annual fund operating expenses0.97%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements0.97%

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

View printable commentary E-mail this page

This commentary is currently not available. Please check back later.

Delaware Smid Cap Growth Fund* Quarterly commentary March 31, 2016

Within the Fund

For the first quarter of 2016, Delaware Smid Cap Growth Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the Russell 2500TM Growth Index. While performance was largely driven by stock exposure, on a sector level, strong relative performance in the healthcare and consumer discretionary sectors was partially offset by weak relative performance in the utilities and materials and processing sectors.

Sally Beauty Holdings contributed to the Fund’s performance during the quarter. The stock rose after the company reported relatively strong financial results that beat consensus expectations. The company appears to be experiencing encouraging results from initiatives that the company started in 2015. Management continues to develop future strategic initiatives that, in our view, could add additional value. We continue to believe that this beauty supply retailer is a relatively steady growth business due to aging demographics, and a relatively low level of discretionary income needed for beauty enhancement and maintenance for the company’s target customer base.

Graco, a maker of industrial fluid and lubrication systems, was a contributor to performance during the quarter. The company reported financial results that exceeded consensus expectations and also declared a regular quarterly dividend. While the company continued to experience some effect from currency fluctuations (more than half of the company’s revenues come from outside the United States) we feel the company’s diverse product offering and acquisition strategy should allow the company to continue to experience strong organic growth and could help offset foreign currency headwinds.

Ellie Mae, a provider of business automation software for the mortgage industry in the U.S., also contributed to performance during the quarter. The company reported financial results that exceeded consensus expectations as Ellie Mae continues to grow its number of customers and its revenue per customer. While the housing market has cyclical characteristics, we believe the company has an opportunity to grow significant market share within its business segment that could offset the cyclical headwinds with higher growth in its revenues and earnings.

J2 Global detracted from the Fund’s performance during the quarter. The stock fell sharply after a high-profile short seller issued a negative report on the company’s overall business model. We continue to be supportive of the company’s acquisition strategy because we believe it should continue to add incremental value for shareholders. We believe this is evident in continued broad-based margin improvements that are driven, in part, by increased synergies and scale from the company’s acquisitions.

Pandora Media detracted from performance during the quarter. Despite receiving more clarity concerning royalty rates in 2015, the stock experienced weakness during the period as investors seemed to be growing impatient with the company’s lack of profitability and rising expenses due, in part, to acquisition related costs. We are supportive of the company’s acquisition strategy that we believe should further strengthen its competitive position. Additionally, the company announced a new CEO, CFO, and COO as it looks to accelerate its growth strategy. We continue to believe Pandora holds a commanding lead for the ad-supported streaming radio segment that drives network effect efficiencies, especially around listener data. Terrestrial radio advertising is a large market in the U.S. alone, and we anticipate that Pandora should 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.

Liberty TripAdvisor Holdings also detracted from performance during the quarter. The stock is an August 2014 spin-off from Liberty Ventures Group and holds TripAdvisor shares. The stock experienced weakness as investors grew increasingly concerned about how real and perceived terrorist threats may affect consumer’s travel plans. Additionally, the online travel industry, overall, continues to experience pricing pressure from the consolidation of the hotel industry and competitive threats from alternative nontraditional travel booking services including Airbnb. Despite these concerns, we continue to believe in TripAdvisor’s unique position within the online travel industry. While the company has a massive amount of user traffic that has been historically undermonetized, it is making a strategic push to better monetize this business through an “instant booking” button that allows consumers to reserve directly on TripAdvisor’s site rather than losing customers to competitor sites. We feel this strategic push could create meaningful growth for the company going forward.

Outlook

Despite positive absolute returns in the equity market during recent years, the ever-changing market sentiment demonstrates to us that there are more than just fundamental factors affecting stock prices. In our view, a lack of confidence in the fundamental outlook suggests 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 across 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.

[16398]

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.

*As of Feb. 24, 2012, Delaware Smid Cap Growth Fund is 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 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.

Holding a relatively concentrated portfolio of a limited number of securities may increase risk because each investment has a greater effect on the Fund’s overall performance than would be the case for a more diversified fund.

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 05/27/2016)

Institutional ClassPriceNet change
NAV$32.790.37
Max offer price$32.79n/a

Total net assets (as of 04/30/2016)

$1.3 billion all share classes

Overall Morningstar RatingTM

Institutional Class shares (as of 04/30/2016)
RatingNo. of funds
Overall5641
3 Yrs5641
5 Yrs4573
10 Yrs5426
Morningstar categoryMid-Cap Growth

(View Morningstar disclosure)

Lipper ranking (as of 04/30/2016)

YTD ranking61 / 576
1 year8 / 550
3 years6 / 487
5 years13 / 433
10 years6 / 311
Lipper classificationSmall-Cap Growth Funds

(View Lipper disclosure)

Benchmark, peer group

Russell 2500 Growth Index (view definition)

Lipper Small-Cap Growth Funds Average (view definition)

Additional information