Delaware Mid Cap Value Fund

Key features

  • Stocks are selected by a highly experienced, value-focused investment team of five sector specialists, averaging over 20 years of industry experience
  • Focus on a company’s ability to effectively deploy and generate sustainable free-cash flow
  • A disciplined investment process with a focus on risk mitigation that has been consistently applied for over 20 years
Fund information
Inception date02/01/2008
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDLMAX
CUSIP246093868
Investment minimums
Initial investment$1,000
Subsequent investments$100
Systematic withdrawal balance$5,000
Account features
Payroll deductionYes
IRAsYes

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 (12/31/2019)

as of quarter-end (12/31/2019)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)28.92%28.92%8.35%8.50%10.90%7.80%02/01/2008
Max offer price21.40%21.40%6.21%7.22%10.24%7.26%
Russell Midcap Value Index27.06%27.06%8.10%7.62%12.41%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)6.81%28.92%8.35%8.50%10.90%7.80%02/01/2008
Max offer price0.68%21.40%6.21%7.22%10.24%7.26%
Russell Midcap Value Index6.36%27.06%8.10%7.62%12.41%n/a

Returns for less than one year are not annualized.

Class A shares have a maximum up-front sales charge of 5.75% and are subject to an annual distribution fee.

Prior to July 31, 2008, the Fund had not engaged in a broad distribution 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
Gross2.34%
Net1.14%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Feb. 28, 2019 through Feb. 28, 2020. Please see the fee table in the Fund’s prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
201916.05%2.17%1.79%6.81%28.92%
2018-2.51%2.57%3.61%-18.50%-15.56%
20174.52%0.00%4.84%6.62%16.84%
20161.48%3.54%4.23%8.31%18.61%
20152.57%2.70%-8.46%3.37%-0.32%
20143.23%4.45%-3.94%3.03%6.71%
201311.38%-0.28%5.83%9.63%28.85%
201211.76%-5.11%3.01%3.56%13.14%
20117.52%-1.70%-22.26%14.68%-5.77%
20109.03%-9.28%13.00%14.20%27.63%
2009-11.13%17.89%18.38%4.68%29.84%
Portfolio characteristics - as of 12/31/2019Russell Midcap Value Index
Number of holdings88614
Market cap (median) Source: FactSet$10.3 billion7973996000.000000000
Market cap (weighted average) Source: FactSet$15.0 billion15809842552.990000000
Portfolio turnover (last fiscal year)12%n/a
Beta (relative to Russell Midcap Value Index) (view definition)1.12n/a
Annualized standard deviation, 3 years (view definition)14.94n/a
Portfolio composition as of 12/31/2019Total may not equal 100% due to rounding.
Domestic equities98.2%
Cash and cash equivalents1.0%
International equities & depositary receipts0.8%
Top 10 holdings as of 12/31/2019

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

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes. Please see the Fund’s complete list of holdings for more information.

Holdings based by issuer.

Holding% of portfolio
Synopsys Inc.2.75%
Raymond James Financial Inc.2.68%
ITT Inc.2.23%
East West Bancorp Inc.2.16%
KBR Inc.1.99%
KeyCorp1.99%
PUBLIC SERVICE ENTERPRISE GROUP INCORPOR1.90%
COMERICA INCORPORATED1.87%
SYNCHRONY FINANCIAL1.83%
HESS CORPORATION1.80%
Total % Portfolio in Top 10 holdings21.20%
Sector allocation as of 12/31/2019

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes. Please see the Fund’s complete list of holdings for more information.

SectorFund
Financial services22.1%
Technology12.4%
Capital spending11.2%
REITs10.1%
Basic industry7.4%
Utilities7.0%
Consumer services6.9%
Energy5.8%
Healthcare4.6%
Consumer cyclical4.5%
Consumer staples2.7%
Transportation2.4%
Business services2.1%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20190.0000.005
20180.1930.018
20170.0570.024
20160.0530.028
20150.2930.009
20141.2100.017
20136.2500.115
20120.2770.054
20110.0000.013
20100.0000.020
20090.0000.039

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.

Chris Beck

Christopher S. Beck, CFA

Executive Director, Chief Investment Officer — US Small-Mid Cap Value Equity

Start date on the Fund: February 2008

Years of industry experience: 38

(View bio)


Steve Catricks

Steven G. Catricks, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2012

Years of industry experience: 21

(View bio)


Kent Madden

Kent P. Madden, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2012

Years of industry experience: 23

(View bio)


Kelly McKee

Kelley McKee Carabasi, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2012

Years of industry experience: 17

(View bio)


Michael Foley

Michael Foley, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: July 2019

Years of industry experience: 10

(View bio)


You may qualify for sales-charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Delaware Funds by Macquarie. More information about these and other discounts is available from your financial intermediary, in the Fund's Prospectus under the section entitled "About your account," and in the Fund's statement of additional information (SAI) under the section entitled "Purchasing Shares."

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 price5.75%
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees0.75%
Distribution and service (12b-1) fees0.25%
Other expenses1.34%
Total annual fund operating expenses2.34%
Fee waivers and expense reimbursements(1.20%)
Total annual fund operating expenses after fee waivers and expense reimbursements1.14%

1The Fund's investment manager, Delaware Management Company (Manager), has contractually agreed to waive all or a portion of its investment advisory fees and/or pay/reimburse expenses (excluding any 12b-1 fees, acquired fund fees and expenses, taxes, interest, short sale dividend and interest expenses, brokerage fees, certain insurance costs, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) in order to prevent total annual fund operating expenses from exceeding 0.89% of the Fund's average daily net assets from Feb. 28, 2019 through Feb. 28, 2020. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

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

Delaware Mid Cap Value Fund Quarterly commentary March 31, 2018

Market Review

The Fund’s benchmark, the Russell Midcap® Value Index declined 2.50% in the first quarter of 2018. Value stocks underperformed growth stocks during the quarter, with the Russell Midcap® Growth Index returning 2.17%. Mid-cap value stocks fell by less than both large- and small-cap value stocks with the large-cap Russell 1000® Value Index falling 2.83% and the Russell 2000® Value Index declining 2.64% for the quarter.

During this period, the yield on the 10-year Treasury note increased from 2.40% to 2.74%, which hurt companies in the yield sensitive real estate investment trust (REIT) and utilities sectors. The consumer cyclical and business services sectors in the benchmark also lagged during the quarter. The only sectors in the benchmark to advance during the quarter were technology and financial services.

During the first quarter, the Senate confirmed Jerome Powell as chairman of the US Federal Reserve. At its March meeting, the Federal Open Market Committee (FOMC) increased the federal funds rate by 0.25 percentage points to a target range of 1.50% to 1.75%. The fourth quarter gross domestic product (GDP) growth rate was a robust 2.9% and full-year GDP growth was 2.3%. The unemployment rate remained low, at 4.1%, and weekly initial unemployment claims on March 23, 2018 reached the lowest level since January 1973, at 215,000. The Conference Board Consumer Confidence Index® continued to measure above 100 with a March survey of 127.7. This was the index’s 20th consecutive month above 100, which seems to be a positive sign for the strength of the economy. These readings keep us cautiously optimistic about the US economy. (Source: Bloomberg.)

Within the Fund

For the first quarter, stock selection and an overweight allocation to the financial services sector contributed to the Fund’s relative performance versus the benchmark. Validus Holdings Ltd. is an insurance holding company with subsidiaries that offer global reinsurance and specialty insurance products. Shares of Validus increased 44% during the quarter as the company announced that it had signed an agreement to be acquired by a larger competitor, American International Group, Inc. for $5.4 billion in cash. Subsequently, we sold the Fund’s position in Validus before the end of the quarter.

Eastman Chemical Co. is a hybrid chemical company that manufactures both commodity chemicals and specialty chemicals. Shares of Eastman Chemical increased 15% after it reported solid fourth quarter results. The company’s earnings and free-cash-flow growth outlook for 2018 is strong, in our view, and is likely to be driven by growth in its specialty chemicals business, which has higher margins. We maintained the Fund’s position in Eastman Chemical as we believe the company trades at an attractive valuation while maintaining good free-cash-flow generation.

Stock selection in the consumer staples sector contributed to the Fund’s relative returns during the quarter, with shares of Dr Pepper Snapple Group Inc. gaining 21%. During the quarter, privately held Keurig Green Mountain Inc., and Dr Pepper Snapple announced a merger agreement that resulted in a premium paid to Dr Pepper Snapple shareholders. We exited the Fund’s position in Dr Pepper Snapple during the quarter as we did not anticipate any higher offers for the company.

Stock selection in the energy sector detracted from the Fund’s relative performance during the quarter. SM Energy Co., which declined 18% during the quarter, is an independent exploration and production company with operations in the Permian Basin, Eagle Ford Shale, and Bakken Shale areas of the United States. SM Energy’s fiscal fourth quarter results were shy of expectations, and the company increased its capital budget for 2018, putting pressure on the stock. We think the company’s overall production profile is solid and healthy relative to its peers. We maintained the Fund’s position in SM Energy as we believe its shares are undervalued and that the company is likely to use the proceeds from recent asset sales to pay down debt and improve its balance sheet.

Homebuilder DR Horton Inc., declined 14% during the quarter. Despite posting solid fourth quarter results, the stock declined due to concern that rising interest rates could negatively affect housing demand. We trimmed the Fund’s position in DR Horton during the quarter but continue to hold the stock due to the company’s strong fundamental trends and Fund, steady free-cash flow, and our belief that the housing market recovery is sustainable.

Kimco Realty Corp., a REIT that owns and operates more than 500 open-air shopping centers in North America, declined 21% during the quarter. Due to recent bankruptcies and announcements of store closings in the retail sector, REITs that own properties leased to retailers tended to perform poorly during the quarter. We maintained the Fund’s position in Kimco Realty because we believe it is trading at a significant discount to the fair market value of its real estate assets.

At the end of the first quarter of 2018, the Fund remained overweight in some of the more cyclical sectors, where we believe valuations and free-cash-flow generation continue to be more attractive. We also believe these sectors are well positioned to benefit from the reduced US corporate tax rate. The largest overweight sector positions in the Fund are in financial services, capital spending, technology, and basic industry. The Fund remained underweight the defensive sectors, including REITs and utilities, as they appeared less attractive to us on a valuation basis relative to other sectors.

Outlook

In our view, the US economy should continue on its path of modest economic growth, as we still believe it will be difficult for the annual US GDP growth rate to break out of the 2% to 4% range. We expect Fed Chairman Powell to take a pragmatic approach when increasing interest rates. We will pay close attention to the Fed’s message, as well as to the consumer and corporate spending environments.

Our team’s disciplined philosophy remains unchanged. We continue to focus on bottom-up stock selection — and specifically on identifying companies that, in our view, trade at attractive valuations, generate strong free-cash flow, and implement shareholder-friendly policies through share buybacks, dividend increases, and debt reduction. In that regard, we are encouraged by the number of companies that continue to meet these criteria. While market volatility could remain at these higher levels, we believe the moderate growth, low inflation, low interest rate environment that has supported equity prices should continue throughout 2018.

Past performance is not a guarantee of future results.

Index definitions

The Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the US equity universe. It includes those Russell Midcap Index companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 1000 Value Index measures the performance of the large-cap value segment of the US equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

The Russell 2000 Value Index measures the performance of the small-cap value segment of the US equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.

The Conference Board Consumer Confidence Index is a barometer of the health of the US economy from the perspective of the consumer. The index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income.

Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

[473224] 04/18

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.

Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

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 877 693-3546. Investors should read the prospectus and the summary prospectus carefully before investing.

The Fund’s investment manager, Delaware Management Company (Manager), may permit its affiliates, Macquarie Investment Management Global Limited (MIMGL) and Macquarie Funds Management Hong Kong Limited, to execute Fund security trades on behalf of the Manager. The Manager may also seek quantitative support from MIMGL.

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.

Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.

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.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 01/17/2020)

Class APriceNet change
NAV$6.730.01
Max offer price$7.14n/a

Total net assets (as of 12/31/2019)

$98.5 million all share classes

Overall Morningstar RatingTM

 
Class A shares (as of 12/31/2019)
Class ANo. of funds
Overall3377
3 Yrs3377
5 Yrs4342
10 Yrs3233
Morningstar categoryMorningstar Mid-Cap Value Category

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 12/31/2019)

YTD ranking131 / 422
1 year131 / 422
3 years126 / 377
5 years63 / 342
10 years114 / 233
Morningstar categoryMorningstar Mid-Cap Value Category

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 12/31/2019)

YTD ranking133 / 360
1 year133 / 360
3 years188 / 326
5 years74 / 268
10 years91 / 188
Lipper classificationLipper Mid-Cap Core Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark and peer group

Russell Midcap® Value Index (view definition)

Morningstar Mid-Cap Value Category (view definition)

Lipper Mid-Cap Core Funds Average (view definition)

Additional information