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.

Key features

  • Thematically oriented, concentrated approach to portfolio management
  • Focused on competitively advantaged companies well positioned to participate in major demand trends
  • Dedicated investment team has utilized the same investment philosophy since 1987
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 (03/31/2018)

as of quarter-end (03/31/2018)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)4.20%31.68%10.84%13.61%12.66%13.49%03/27/1986
Max offer price-1.81%24.13%8.68%12.27%11.99%13.28%
Russell 2500 Growth Index2.38%19.92%9.11%13.37%11.17%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)4.20%31.68%10.84%13.61%12.66%13.49%03/27/1986
Max offer price-1.81%24.13%8.68%12.27%11.99%13.28%
Russell 2500 Growth Index2.38%19.92%9.11%13.37%11.17%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
20184.20%n/an/an/an/a
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%
Portfolio characteristics - as of 03/31/2018Russell 2500 Growth Index
Number of holdings361,341
Market cap (median) Source: FactSet$6.1 billion1397550000.000000000
Market cap (weighted average) Source: FactSet$6.5 billion5998520149.250000000
Portfolio turnover (last fiscal year)159%n/a
Beta (relative to Russell 2500 Growth Index) (view definition)0.84n/a
Annualized standard deviation, 3 years (view definition)13.92n/a
Portfolio composition as of 03/31/2018Total may not equal 100% due to rounding.
Domestic equities97.9%
International equities & depositary receipts2.2%
Top 10 holdings as of 03/31/2018

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
Weight Watchers International Inc.5.78%
Collegium Pharmaceutical Inc.5.39%
Match Group Inc.4.90%
LGI Homes Inc.4.50%
Neurocrine Biosciences Inc.4.43%
Burlington Stores Inc.4.38%
Pacira Pharmaceuticals Inc.4.27%
Splunk Inc.4.20%
American Woodmark Corp.4.14%
Exelixis Inc.4.00%
Total % Portfolio in Top 10 holdings45.99%

Sector allocation as of 03/31/2018

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 technology38.0%26.3%
Healthcare24.9%18.2%
Consumer discretionary23.7%14.3%
Industrials8.0%19.7%
Financials5.4%7.7%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20180.0000.000
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

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]

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 December 31, 2017

Market Review

The US equity markets continued to move higher during the fourth quarter of 2017 with many indices hitting all-time highs. At home and abroad the cycle is gaining in momentum. Job growth is strong, wage growth has begun, banks are more eager to lend, and confidence is high from Main Street to the boardroom. We believe these factors, combined with more fiscal stimulus available through the new tax reform legislation, should lead to expect continued economic strength.

Our portfolio positioning remains largely unchanged. We are hyper-focused on what we believe are the strongest growing trends within the economy. We believe these trends could be long lasting and that the fundamental effect on the leaders of these trends will be significant. It’s a very exciting time to be a growth investor. We believe this environment is ideally suited for our approach.

Within the Fund

For the fourth quarter, the Fund had strong relative performance within all sectors we invested in.

The strongest contributor to the Fund’s relative performance during the quarter was LGI Homes, one of the nation’s fastest-growing homebuilders, which is engaged in the design and construction of homes across the country. Importantly, LGI is predominantly an entry-level homebuilder, which we view favorably. We believe this will be the sweet spot of the housing market for the intermediate term, given favorable demographics and the maturing of millennials. The company’s primary business is building speculative homes in affordable locations using a highly efficient construction process combined with a differentiated selling process to drive customers to its sales centers. When LGI reported third-quarter results in early November, its earnings per share of $1.40 beat Wall Street’s $1.33 estimate, driven by higher homebuilding revenue from better-than-expected closings growth of 64%.

The Fund’s largest detractor for the fourth quarter was Trade Desk, which declined after providing conservative commentary for the quarter. Trade Desk is a leader in advertising technology; however, some large advertising agencies and their customers currently face crosscurrents as they transition to a new Internet-oriented ad model. In 2018, Trade Desk should see continued growth due to the ongoing global shift of ad dollars to the Internet.

Outlook

Finally, the pendulum swing from fear to confidence has begun in earnest. After a lost decade of growth where macro issues dominated the equity markets, we are now seeing fundamental strength matter more and more. We’ve tried to maintain some balance with our optimism, but if anything, we believe we haven’t been optimistic enough. The trends we are invested in are large in scope and gaining in momentum. Enormous markets such as food, content, transportation, and banking are being completely transformed. In our view, this fundamental and economic strength is likely to continue.

There are the basic risks that we monitor (for example, geopolitical risk or an overly aggressive Federal Reserve) but what will likely finally end this run will be inflation. We believe all of the stimulus from both monetary and fiscal resources will eventually cause prices and yields to rise and subsequently bring about change to the constructive economic conditions we have today. We do not think this threat will happen soon. Rates are still historically low in the United States, and many foreign countries have bond yields near zero. Therefore, we feel an end to this expansion is far off. While corrections can happen at any time, we do not think we are nearing a recession or bear market.

Past performance is not an indicator of future results.

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

[372033] 01/18

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.

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 04/20/2018)

Class APriceNet change
NAV$23.37-0.10
Max offer price$24.80n/a

Total net assets (as of 03/31/2018)

$1.1 billion all share classes

Overall Morningstar RatingTM

 
Class A shares (as of 03/31/2018)
Class ANo. of funds
Overall5592
3 Yrs4592
5 Yrs4531
10 Yrs5402
Morningstar categorySmall Growth

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 03/31/2018)

YTD ranking195 / 722
1 year33 / 684
3 years107 / 592
5 years101 / 531
10 years30 / 402
Morningstar categorySmall Growth

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 03/31/2018)

YTD ranking191 / 588
1 year34 / 549
3 years98 / 479
5 years94 / 439
10 years26 / 333
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