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 US economy. The portfolio managers particularly seek small to mid-sized companies.

Fund information
Inception date03/27/1986
Dividends paid (if any)Annually
Capital gains paid (if any)December
Fund identifiers
NASDAQDFCIX
CUSIP245906102
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
Payroll DeductionYes
IRAsYes

On Sept. 25, 2014, Class B shares of the Fund converted to Class A shares.

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 (12/31/2017)

as of quarter-end (12/31/2017)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)35.13%35.13%11.44%14.91%10.53%13.46%03/27/1986
Max offer price27.39%27.39%9.27%13.56%9.88%13.25%
Russell 2500 Growth Index24.46%24.46%10.88%15.47%9.62%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)17.93%35.13%11.44%14.91%10.53%13.46%03/27/1986
Max offer price11.15%27.39%9.27%13.56%9.88%13.25%
Russell 2500 Growth Index6.35%24.46%10.88%15.47%9.62%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.

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
Gross1.21%
Net1.21%

The Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board of Trustees. Please see the fee table in the Fund's prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20176.93%3.87%3.18%17.93%35.13%
20161.16%0.04%4.92%-9.89%-4.33%
20155.91%2.14%-6.59%5.95%7.05%
2014-4.38%0.17%-2.02%9.55%2.81%
201310.34%4.01%10.53%11.02%40.84%
201216.94%-6.06%2.51%-1.98%10.38%
201114.33%3.20%-15.92%8.83%7.96%
20104.74%-1.78%14.64%14.49%35.03%
20090.52%14.84%16.90%7.07%44.49%
2008-13.93%6.15%-13.80%-25.85%-41.61%
20074.91%7.85%2.86%-3.52%12.28%
Portfolio characteristics - as of 12/31/2017Russell 2500 Growth Index
Number of holdings441,350
Market cap (median) Source: FactSet$6.4 million1419285500.000000000
Market cap (weighted average) Source: FactSet$6.5 million5621213356.350000000
Portfolio turnover (last fiscal year)159%n/a
Beta (relative to Russell 2500 Growth Index) (view definition)0.79n/a
Annualized standard deviation, 3 years (view definition)13.18n/a
Portfolio composition as of 12/31/2017Total may not equal 100% due to rounding.
Domestic equities99.1%
International equities & depositary receipts0.8%
Cash and cash equivalents0.1%
Top 10 holdings as of 12/31/2017

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
Pacira Pharmaceuticals Inc.5.38%
Weight Watchers International Inc.4.79%
LGI Homes Inc.4.57%
Match Group Inc.4.47%
Exelixis Inc.4.23%
Neurocrine Biosciences Inc.3.90%
American Woodmark Corp.3.68%
EPAM Systems Inc.3.58%
Splunk Inc.3.46%
Arista Networks Inc.3.45%
Total % Portfolio in Top 10 holdings41.51%

Sector allocation as of 12/31/2017

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.
SectorFundBenchmark
Information technology33.7%25.3%
Healthcare26.1%17.6%
Consumer discretionary23.2%15.0%
Industrials11.2%19.5%
Financials4.6%7.6%
Real Estate1.1%3.5%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20170.2990.000
20169.2340.000
20153.0080.000
20144.1220.000
20131.0790.000
20121.5820.000
20110.9460.000
20100.9380.205
20090.0000.000
20081.6920.000
20072.7520.000

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.

Alex Ely, of the Delaware Investments Small/Mid-Cap Growth Equity team, discusses how the blend of people, process, and performance helps his team find the next great growth trends. [Runtime: 2:01]

Watch the video

Read video transcript

Alexander Ely

Alex Ely 

Senior Vice President, Chief Investment Officer — Small/Mid-Cap Growth Equity

Start date on the Fund: July 2016

Years of industry experience: 25

(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 fees0.72%
Distribution and service (12b-1) fees0.25%
Other expenses0.24%
Total annual fund operating expenses1.21%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.21%

1The Fund's Class A shares are subject to a blended 12b-1 fee of 0.10% on all shares acquired prior to June 1, 1992 and 0.25% on all shares acquired on or after June 1, 1992. This method of calculating Class A 12b-1 fees may be discontinued at the sole discretion of the Board of Trustees.

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

Delaware Smid Cap Growth Fund Quarterly commentary September 30, 2017

Overview

US equity markets continued their run during the third quarter of 2017, driven by strong moves in technology and industrial shares. Both within the United States and worldwide, this cycle is taking hold. This is an important development as the fundamentals of individual companies and industries should matter more in the future, when there will likely be a stable level of macro support.

Within the Fund

On a sector basis for the quarter, the Fund had strong relative performance within the technology and consumer discretionary sectors but weaker relative performance within healthcare and consumer staples.

The Fund’s largest contributor to performance during the quarter was Take-Two Interactive Software, owing to solid earnings and several positive trends within the gaming space. Gaming’s popularity is improving worldwide, and leaders within the space have widened their competitive moat through the accumulation of talent and intellectual property. Publishers are also seeing improved profitability and visibility as consumers opt for digital downloads over physical sales and make more in-game purchases. Next year, the company is on target to release its next major title, Red Dead Redemption 2, which should lead to continued strong growth.

The Fund’s largest detractor from performance during the quarter was Pacira Pharmaceuticals. The specialty pharmaceutical company is focused on developing and commercializing non-opioid drugs for the treatment of pain following surgery. Pacira’s main commercial product, Exparel®, is approved by the US Food and Drug Administration (FDA) and marketed for post-operative pain following a wide variety of surgical procedures including total knee replacement, hernia repair, and back surgery. The administration of Exparel by doctors during surgery has been shown in a number of clinical trials to reduce the need for opioids to treat pain during the first few days after the procedure; a product of this profile is notable in the context of the opioid epidemic in America. During the quarter, Pacira announced mixed results from late-stage clinical trials that evaluated Exparel for use as a nerve block. Following the announcement, shares of Pacira were weak as investors considered whether the data were sufficient to warrant FDA approval of Exparel as a nerve block. We believe the totality of the clinical data for Exparel as a nerve block should eventually lead to an FDA approval sometime next year and we view this as a significant revenue expansion opportunity for the company.

Outlook

We believe the process has begun within the economy where the combination of cyclical strength and consumer confidence builds upon itself. It is during these times that companies and consumers make more ambitious decisions. Simultaneously, technological developments are affecting practically every industry, creating massive opportunities for those companies that can offer new, better, faster, and cheaper solutions. Our goal is to identify these emerging trends and own the companies leading them.

Several issues give us caution. The inability of the Trump administration to enact policy could affect confidence over time as people want improvements to our healthcare system, our infrastructure, and our tax code. Also, there are geopolitical risks that could cause investors to pull in their horns on occasion. Regardless, we believe that the economy and the markets are in a position of strength, and while there could be a correction at any time, we do not think we are nearing a recession or bear market.

Our overall portfolio positioning and the trends within the market that we find attractive remain mostly unchanged. We are finding that many of the trends that we are invested in are becoming more distinct and fundamentally robust. We continue to be positively inclined toward many industries but insist on above-average growth for the companies within the portfolio. While trends won’t play out in a straight line, we are confident in the fundamental strength exhibited and believe the portfolio will benefit and outperform over time.

Past performance is not an indicator of future results.

The Russell 2500 Growth Index measures the performance of the small- to mid-cap growth segment of the US equity universe. It includes those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values.

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

[291196] 10/17

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 877 693-3546. 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.

Risk is increased in a concentrated portfolio since it holds a limited number of securities with each investment having a greater effect on the overall performance.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 01/17/2018)

Class APriceNet change
NAV$23.100.34
Max offer price$24.51n/a

Total net assets (as of 12/31/2017)

$1.0 billion all share classes

Overall Morningstar RatingTM

 
Class A shares (as of 12/31/2017)
Class ANo. of funds
Overall5609
3 Yrs4609
5 Yrs4544
10 Yrs5406
Morningstar categorySmall Growth

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 12/31/2017)

YTD ranking39 / 684
1 year39 / 684
3 years145 / 609
5 years163 / 544
10 years34 / 406
Morningstar categorySmall Growth

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 12/31/2017)

YTD ranking40 / 558
1 year40 / 558
3 years124 / 502
5 years140 / 457
10 years30 / 342
Lipper classificationLipper Small-Cap Growth Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

Russell 2500 Growth Index (view definition)

Morningstar Small Growth Category (view definition)

Lipper Small-Cap Growth Funds Average (view definition)

Additional information