Delaware International Small Cap Fund

Meet Portfolio Manager Gabriel Wallach in our 3Q18 webinar.

Key features

  • Active approach seeking to capture underappreciated growth driven by positive fundamental change
  • Collaborative team with long history of successfully navigating an inefficient market
  • Nimble investment process allowing for swift decision making amid volatile markets
Fund information
Inception date12/29/2008
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDGGAX
CUSIP246118541
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 (10/31/2018)

as of quarter-end (09/30/2018)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-14.52%-10.76%7.45%5.75%n/a13.06%12/29/2008
Max offer price-19.41%-15.87%5.34%4.51%n/a12.38%
MSCI ACWI Ex-USA Small Cap Index (Net)-13.71%-9.73%5.47%3.36%n/a10.80%
MSCI ACWI Ex-USA Small Cap Index (Gross)-13.42%-9.39%5.85%3.73%n/a11.19%
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-2.02%3.21%15.54%9.15%n/a14.76%12/29/2008
Max offer price-7.63%-2.76%13.28%7.87%n/a14.06%
MSCI ACWI Ex-USA Small Cap Index (Net)-1.51%1.86%11.24%6.14%n/a12.07%
MSCI ACWI Ex-USA Small Cap Index (Gross)-1.42%2.24%11.65%6.52%n/a12.47%

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 Dec. 29, 2010, 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 that may have been lower than the Fund's current expenses. The returns would have been lower without the 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.

The Global Ex-US Equity Team assumed management of the Fund on 11/20/16. Performance prior to that date is that of the previous team.

Expense ratio
Gross2.48%
Net1.37%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from March 29, 2018 to March 29, 2019. Please see the fee table in the Fund’s prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20184.67%-4.58%-2.02%n/an/a
201710.14%9.53%15.34%5.47%46.76%
2016-2.49%-0.98%10.52%-7.24%-1.01%
20151.12%0.95%-10.29%8.48%-0.66%
2014-1.34%4.18%-3.91%3.26%1.99%
20135.38%-1.60%10.56%7.58%23.33%
201216.54%-6.50%5.40%2.37%17.57%
20114.13%3.42%-15.41%7.21%-2.34%
20104.40%-8.51%18.42%8.24%22.44%
2009-0.47%21.59%15.55%8.24%51.36%
Portfolio characteristics - as of 10/31/2018MSCI ACWI Ex-USA Small Cap Index (Net)
Number of holdings84n/a
Market cap (median) Source: FactSet$1.7 billion763297249.910000000
Market cap (weighted average) Source: FactSet$2.1 billion2111768155.780000000
Portfolio turnover (last fiscal year)142%%
Beta (relative to MSCI ACWI Ex-USA Small Cap Index (Net)) (view definition)1.04n/a
Annualized standard deviation, 3 years (view definition)13.98n/a
Portfolio composition as of 10/31/2018Total may not equal 100% due to rounding.
International equities & depositary receipts96.2%
Cash and cash equivalents3.8%
Top 10 holdings as of 10/31/2018

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
Burford Capital Ltd.2.27%
Keywords Studios PLC2.18%
Leroy Seafood Group ASA2.04%
TechnoPro Holdings Inc.2.01%
BW Offshore Ltd.1.99%
Fevertree Drinks PLC1.95%
Sterlite Technologies Ltd.1.93%
Israel Discount Bank Ltd.1.93%
Abcam PLC1.91%
China Resources Cement Holdings Ltd.1.91%
Total % Portfolio in Top 10 holdings20.12%

Top 10 countries as of 10/31/2018

List may exclude cash, cash equivalents, and exchanged-traded funds (ETFs) that are used for cash management purposes.

Country% of portfolio
United Kingdom20.2%
Japan17.7%
Canada8.9%
Norway6.1%
Germany5.0%
Ireland4.7%
China3.7%
France3.5%
Italy2.6%
Australia2.2%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20180.0000.000
20170.3230.000
201612.8800.000
20150.6680.000
20140.0000.076
20130.3230.000
20120.0000.000
20110.1110.000
20100.4060.028
20091.1700.027
20080.0000.000

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.

Joseph Devine

Joseph Devine 

Senior Vice President, Chief Investment Officer — Global Ex-US Equity

Start date on the Fund: November 2016

Years of industry experience: 24

(View bio)


Stephan Maikkula

Stephan Maikkula, CFA, CMT

Vice President, Portfolio Manager

Start date on the Fund: November 2016

Years of industry experience: 21

(View bio)


Gabriel Wallach

Gabriel Wallach 

Vice President, Portfolio Manager

Start date on the Fund: November 2016

Years of industry experience: 26

(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 fees0.85%
Distribution and service (12b-1) fees0.25%
Other expenses1.38%
Total annual fund operating expenses2.48%
Fee waivers and expense reimbursements(1.11%)
Total annual fund operating expenses after fee waivers1.37%

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 1.12% of the Fund's average daily net assets from March 29, 2018 through March 29, 2019. 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 International Small Cap Fund

Quarterly commentary March 31, 2018

Market review

Concerns about a looming trade war and increased regulation of technology companies shook global financial markets during the first quarter of 2018, ultimately eclipsing a still-positive economic backdrop. Events in the United States held sway, with the Trump administration’s move to impose tariffs on a wide array of imports — along with news that Facebook had leaked the personal data of its users — driving equity prices sharply lower after reaching record highs in January. Though global technology stocks finished the first quarter in positive territory, the sector nonetheless sustained intense selling in the weeks following the Facebook disclosure. Reflecting this more cautious tone, the total capitalization of the cryptocurrency market also plunged by about two-thirds during the quarter. Meanwhile, benchmark and market interest rates inched higher in the US as the domestic labor market tightened and the Federal Reserve signaled that it would continue to gradually remove monetary accommodation.

The following factors also affected global markets:

  • The Japanese yen hit a 17-year high as global sentiment weakened.
  • Hints of détente appeared on the Korean peninsula.
  • The International Monetary Fund (IMF) boosted its global growth forecast to 3.9% for 2018 and 2019.

Data: Bloomberg

Within the Fund

For the first quarter of 2018, strong stock selection within industrials and information technology contributed to the Fund’s relative performance versus its benchmark, the MSCI ACWI ex USA Small Cap Index. From a country perspective, stock selection in Japan and the United Kingdom helped drive performance during the quarter. Key individual contributors included Tateru Inc., SMS Co. Ltd., and Kingdee International Software Group Company Limited.

Tateru is a Japanese company that combines information technology and real estate to offer an efficient platform for matching investors to property and for managing apartment ownership. The stock outperformed during the quarter after reporting better-than-expected earnings. In a low-yielding Japanese investing environment, the company benefited as investors increasingly sought supplemental retirement income.

SMS is an online Japanese recruitment agency and staffing-services provider focusing on healthcare and elderly care. The share price rose during the quarter after SMS reported strong fiscal-year third-quarter results, confirming the tightness of Japan’s labor market and the strong outlook for healthcare and elderly care employment.

Kingdee International Software is a Chinese enterprise resource planning (ERP) software developer focusing on China’s small- and medium-sized enterprise segment. The share price rose during the quarter after the company reported better-than-expected earnings.

From a sector perspective, consumer discretionary detracted from the Fund’s performance during the first quarter. From a country perspective, Sweden and Brazil detracted from performance during the period. Key individual detractors included Seria Co. Ltd., Scandic Hotels Group AB, and Evolution Gaming Group AB.

Seria is a leading operator of Y100 stores in Japan (similar to “Dollar Stores” in the US). The share price declined during the quarter after the company reported in-line financial results and declining same-store sales growth in January and February. We continued to hold the position at the end of the quarter.

Swedish hotel operator Scandic Hotels Group underperformed after it warned that fourth-quarter results would fall short of market expectations. The hotel market in Stockholm was weaker than expected and higher nonrecurring costs for central functions weighed on the company’s shares. We decided to exit the position during the quarter.

Shares of Swedish gaming company Evolution Gaming Group underperformed during the quarter on concerns of higher tax rates in Sweden and the Netherlands. The developer of live casino solutions for online casino operators has extensive earnings exposure to Sweden. We continued to hold the position during the quarter.

Positioning and outlook

The Fund’s country and sector relative weights continue to be driven primarily by bottom-up stock selection and where we’re finding attractive opportunities. As a result, at the end of the quarter, the Fund’s largest country overweights were the UK and Brazil. The largest sector overweights were information technology and consumer staples. The largest underweights relative to the benchmark from a country perspective were South Korea and Australia. Real estate and utilities were the largest sector underweights.

We continue to be confident about the opportunities that are present in international small-cap equities. While political and geopolitical uncertainty persists around the world, we believe the underlying economies in many regions remain supportive. Despite a pause during the most recent quarter, small-caps outside the US have exhibited strong performance over the past several quarters; we believe that will likely continue. International small-caps are poised, in our view, to catch up to the relative outperformance of US small-caps over the past decade. As the US economic recovery has been a step ahead of non-US markets, we are currently seeing key catalysts such as reduced political risk, strong earnings, and an overall encouraging macro environment that should lead to an inflection point. While we are mindful of the risks present, we remain optimistic.

Regardless of the economic environment, we will continue to adhere to our disciplined approach that focuses on identifying positive fundamental change in companies with what we believe to be strong and sustainable business models.

Past performance is not a guarantee of future results.

Index definitions

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the US stock market.

The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization weighted index designed to measure equity market performance of developed markets, excluding the United States and Canada. Index “net” return approximates the minimum possible dividend reinvestment, after deduction of withholding tax at the highest possible rate. Index “gross” return approximates the maximum possible dividend reinvestment.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index designed to measure equity market performance across emerging market countries worldwide. Index “net” return approximates the minimum possible dividend reinvestment, after deduction of withholding tax at the highest possible rate.

The Russell 2000 Index measures the performance of the small-cap segment of the US equity universe.

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

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.

[478842] 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.

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.

International investments entail risks not ordinarily associated with US investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.

Investing in emerging markets can be riskier than investing in established foreign markets due to increased volatility and lower trading volume.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

All third-party marks cited are the property of their respective owners.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Total net assets (as of 10/31/2018)

$90.7 million all share classes

Overall Morningstar RatingTM

 
Class A shares (as of 10/31/2018)
Class ANo. of funds
Overall3103
3 Yrs3103
5 Yrs396
Morningstar categoryForeign Small/Mid Growth*

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 10/31/2018)

YTD ranking98 / 138
1 year87 / 134
3 years17 / 103
5 years19 / 96
10 yearsn/a
Morningstar categoryForeign Small/Mid Growth

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 10/31/2018)

YTD ranking153 / 231
1 year132 / 226
3 years29 / 175
5 years23 / 146
10 yearsn/a
Lipper classificationLipper International Small/Mid-Cap Growth Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

MSCI ACWI (All Country World Index) ex USA Small Cap Index (view definition)

Morningstar Foreign Small/Mid-Cap Growth Category (view definition)

Lipper International Small/Mid-Cap Growth Funds Average (view definition)

Additional information