All-Cap Growth Equity

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All-Cap Growth Equity

  1. 1. Fact sheet • 1Q 2010 All-Cap Growth Equity ss ro c e sp ou ti nu c on Investment philosophy Process Valuation / 1. Idea sourcing Validation We are growth investors. We Advantaged • Rely primarily on qualitative idea generation seek superior returns through n ti o Client business uc • Well-defined investment criteria preclude portfolio model s tr holding a concentrated portfolio on most companies from consideration oc of companies that we believe Po r t f o l i ci ng • Continuous pressure from new idea pipeline ur so have superior business models ide a and opportunities to generate 2. Fundamental change Fundamental change • Disruption can create opportunity for consistent, long-term growth of growth and potential for excess returns intrinsic business value. 5. Portfolio construction • Three primary forms: industry, product, and • Differentiated growth philosophy, management • Concentrated portfolio: 35-60 holdings emphasizing intrinsic business value • Positions are conviction-weighted, and cash economics 3. Advantaged business model with risk overlay • Seek strong barriers to entry and • Concentrated portfolio construction – High return/low risk: 5+% sustainable competitive advantage reflects conviction rather than – Moderate return/low risk: 4%–5% benchmark • Returns on invested capital should be forecast to substantially exceed cost of capital – High return/high risk: 3%–4% • Stable, veteran team with high level of accountability and peer scrutiny • Evaluate from a business owner’s – Maximum weight: 8% perspective • Broad sector and industry diversification • Flat team structure — all team members are analysts first and foremost 4. Valuation / Validation • Low turnover: 30%–40% expected • Entrepreneurial boutique structure and • Discounted cash flow (DCF) analysis in most years significant personal stakes in products based on conservative projections of cash 6. Sell discipline managed economics and risk-adjusted discount rate • Better idea emerges from research “bench” • Performance-driven investment culture • Seeking attractive absolute, not relative • Unexpected, negative fundamental change limits asset capacity valuations • Valuation becomes stretched • Accounting earnings should reconcile with cash economics • Portfolio construction considerations People Jeffrey S. Van Harte, CFA Christopher M. Ericksen, CFA Lisa L. Hansen Senior Vice President, Chief Investment Vice President, Portfolio Manager, Vice President, Head of Focus Growth Officer — Focus Growth Equity (29 years)* Equity Analyst (15 years)* Equity Trading (29 years)* Christopher J. Bonavico, CFA Patrick G. Fortier, CFA Deborah Sabo, CMT Vice President, Senior Portfolio Manager, Vice President, Portfolio Manager, Vice President, Equity Trader — Analyst (22 years)* Equity Analyst (15 years)* Focus Growth Equity (15 years)* Daniel J. Prislin, CFA Gregory M. Heywood, CFA Kevin J. Brown Vice President, Senior Portfolio Manager, Vice President, Portfolio Manager, Senior Investment Specialist (15 years)* Equity Analyst (16 years)* Equity Analyst (17 years)* Kenneth F. Broad, CFA Van Tran Vice President, Senior Portfolio Manager, Assistant Vice President, Equity Analyst (15 years)* Portfolio Manger (13 years)* * Total years of investment management experience. Delaware Investments, 2005 Market Street, Philadelphia, Pennsylvania 19103-7094 Delaware Investments refers to Delaware Management Holdings, Inc. and its subsidiaries. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide. Institutional investment management is provided by Delaware Investment Advisers, a series of Delaware Management Business Trust (DMBT). DMBT is a registered investment advisor. Delaware Investments is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and that entity's obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of that entity, unless noted otherwise. The views expressed are current as of the dates shown and are subject to change at any time. FS-10Q1-FGAC Please refer to back cover for important performance disclosures. The information presented is available for institutional client use only. It is not intended and should not be construed to be a presentation of information for any mutual fund, including Delaware Pooled® Trust. ©2010 Delaware Management Holdings, Inc.
  2. 2. All-Cap Growth Equity As of March 31, 2010 Sector weightings1 (supplemental) Total assets managed in this strategy: $408 million All-Cap Growth EquityEquity All-Cap Growth Russell 3000 3000 Growth Index Russell Growth Index Benchmark: Russell 3000® Growth Index 25.1% The Russell 3000 Growth Index measures Technology 29.3% the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 companies 20.1% Healthcare with higher price-to-book ratios and higher 16.6% forecasted growth values. Investors cannot invest directly in an index. 17.1% Financial services 7.0% Consumer 15.8% Portfolio characteristics1 discretionary 14.6% (supplemental) Consumer 7.5% EPS growth rate (weighted average five year) staples 12.1% Portfolio 25.73% Benchmark 16.33% Materials & 4.8% processing 4.2% P/E ratio (weighted average forward 12 months) Portfolio 18.98x Producer 4.2% Benchmark 16.13x durables 11.1% Annual revenues (weighted average) Portfolio $11.9 billion 3.9% Energy Benchmark $36.2 billion 4.2% Number of holdings Portfolio 58 1.3% Utilities 0.9% Benchmark 1,887 Market capitalization (weighted average) Portfolio $23.7 billion Cash 0.2% 0.0% Benchmark $71.9 billion Market capitalization (median) Portfolio $5.0 billion Top 10 holdings1 (supplemental) Benchmark $0.7 billion Company • sector Percent of portfolio Apple • Technology 6.48% Peet's Coffee & Tea • Consumer staples 4.32 Gilead Sciences • Healthcare 3.81 Netflix • Consumer discretionary 3.78 Allergan • Healthcare 3.61 IntercontinentalExchange • Financial services 3.38 CME Group - Class A • Financial services 3.37 VeriSign • Technology 3.04 Perrigo • Healthcare 3.03 Medco Health Solutions • Healthcare 2.94 Top 10 total 37.76% 1. The portfolio information shown above is that of a representative All-Cap Growth Equity portfolio. Holdings, FS-10Q1-FGAC weightings and characteristics are current as of the day indicated, are subject to change, and may not reflect the current portfolio. Please refer to back cover for important performance disclosures.
  3. 3. Annualized returns (supplemental) All-Cap Growth Equity (gross of fees) All-Cap Growth Equity (net of fees) Russell 3000® Growth Index All-Cap Growth Equity (gross of fees) All-Cap Growth Equity (net of fees) Russell 3000 Growth Index 68.37 67.24 50.50 Percent 6.60 6.41 4.87 6.78 6.00 1.91 1.18 3.46 -0.92 -3.23 -3.90 -4.01 1Q 2010 1 year 3 years 5 years 10 years Risk/reward comparison (5 years through March 31, 2010) 8.46 Portfolio 5 years Returns Standard deviation Portfolio . . . . . . . .6.78 . . . . . . . . . . 20.28 Benchmark Returns 3.46 Benchmark . . . . . .3.46 . . . . . . . . . . 16.88 -1.54 11.88 16.88 21.88 Standard deviation Composite statistics and performance Delaware Delaware All-Cap All-Cap Russell Growth Equity Growth Equity 3000 Growth Number of Composite size Internal Percentage of gross return net return Index return portfolios ($mm) dispersion firm assets 2010 (through 1Q) 6.60% 6.41% 4.87% <5 242.1 - 0.37% 2009 59.33% 58.29% 37.01% <5 301.6 n/a 0.48% 2008 -43.47% -43.89% -38.44% <5 176.7 n/a 0.36% 2007 11.24% 10.40% 11.40% <5 375.7 n/a 0.48% 2006 2.80% 2.04% 9.46% <5 463.3 n/a 0.50% 2005 18.84% 17.96% 5.17% <5 575.8 n/a 0.77% 2004 9.61% 8.79% 6.93% 6 688.0 0.09% 1.26% 2003 39.82% 38.78% 30.97% 6 789.4 0.78% 1.89% 2002 -31.72% -32.22% -28.04% 6 681.4 0.34% 2.18% 2001 -23.59% -24.02% -19.63% 6 1,258.2 n/a 3.73% 2000 -21.21% -21.55% -22.41% 6 1,816.8 n/a 4.46% FS-10Q1-FGAC The performance data quoted represent past performances; past performance does not guarantee future results. Please refer to back cover for important performance disclosures.
  4. 4. All-Cap Growth Equity As of March 31, 2010 Performance disclosures: All-Cap Growth Equity Composite The Delaware All-Cap Growth Equity composite seeks to buy stocks of higher-quality growth companies in the large-, mid-, and small-cap ranges that we feel have clean balance sheets and low debt levels, and are clear market/industry leaders and possess consistent, accelerating earnings. Performance results are shown as total returns, net of dividend withholding taxes, assume reinvestment of dividends and capital gains as well as no reductions for taxes, are presented before and after the deduction of Delaware Investments investment advisory fees, and are calculated in U.S. dollars. The performance data presented here should not be taken as any guarantee or other assurance as to future results. Delaware Investments claims compliance with the Global Investment Performance Standards (GIPS®). To receive a complete list and description of Delaware Investments composites and/or a presentation that adheres to the GIPS standards, contact Susan L. Natalini at 215 255-2300, or write Delaware Investments, 2005 Market Street, Philadelphia, PA 19103-7094, or e-mail DIA@delinvest.com. FS-10Q1-FGAC

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