Delaware Emerging Markets Fund

Objective

Delaware Emerging Markets Fund seeks long-term capital appreciation.

Strategy

The Fund invests primarily in a broad range of equity securities of companies located in emerging market countries.

Key features

  • Investment approach geared towards long-term structural growth opportunities - focus on companies versus countries
  • Emphasis on companies with franchise sustainability and attractive valuations
  • Dedicated emerging markets team has managed the Fund since 2006
Fund information
Inception date06/10/1996
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDEMIX
CUSIP245914817

Institutional Class shares available only available to certain investors. See the prospectus for more information.

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 (06/30/2018)

as of quarter-end (06/30/2018)

YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-8.33%6.63%9.54%7.41%3.87%8.17%06/10/1996
MSCI Emerging Markets Index (Net)-6.66%8.20%5.60%5.01%2.26%n/a
MSCI Emerging Markets Index (Gross)-6.51%8.59%5.98%5.39%2.60%n/a
1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-8.15%6.63%9.54%7.41%3.87%8.17%06/10/1996
MSCI Emerging Markets Index (Net)-7.96%8.20%5.60%5.01%2.26%n/a
MSCI Emerging Markets Index (Gross)-7.86%8.59%5.98%5.39%2.60%n/a

Returns for less than one year are not annualized.

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
Gross1.41%
Net1.41%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
2018-0.20%-8.15%n/an/an/a
201714.50%6.60%13.40%2.57%41.98%
20165.54%2.66%14.30%-4.80%17.89%
2015-3.93%4.81%-21.66%9.34%-13.75%
2014-1.41%7.92%-3.41%-10.66%-8.18%
20132.15%-5.16%13.61%3.57%13.99%
201212.11%-11.73%9.48%7.73%16.72%
20113.60%-3.96%-25.47%6.98%-20.66%
20102.71%-10.48%18.01%9.54%18.85%
2009-0.91%35.18%22.81%8.59%78.62%
2008-9.65%1.79%-26.84%-26.59%-50.61%

Institutional Class shares available only available to certain investors. See the prospectus for more information.

Portfolio characteristics - as of 06/30/2018MSCI Emerging Markets Index (Net)
Number of holdings142687
Market cap (median) Source: FactSet$5.5 billion6089436616.840000000
Market cap (weighted average) Source: FactSet$102.0 billion99605405856.460000000
Portfolio turnover (last fiscal year)11%n/a
Beta (relative to MSCI Emerging Markets Index (Net)) (view definition)1.17n/a
Annualized standard deviation, 3 years (view definition)19.58n/a
Portfolio composition as of 06/30/2018Total may not equal 100% due to rounding.Values in excess of 100% and negative values may appear as the result of certain assets and liabilities.
International equities & depositary receipts96.4%
Domestic equities3.2%
Cash and cash equivalents0.4%
Top 10 holdings as of 06/30/2018

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
Reliance Industries Ltd.5.99%
SK Telecom Co. Ltd.4.94%
Samsung Electronics Co. Ltd.4.61%
Alibaba Group Holding Ltd.4.50%
SK Hynix Inc.4.43%
Tencent Holdings Ltd.4.10%
Taiwan Semiconductor Manufacturing Co. L3.55%
China Mobile Ltd.3.51%
SINA Corp. China3.01%
Baidu Inc.2.73%
Total % Portfolio in Top 10 holdings41.37%

Top 10 countries as of 06/30/2018

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

Country% of portfolio
China33.1%
South Korea18.4%
Brazil9.4%
India8.4%
Taiwan7.8%
Russia7.1%
Mexico5.8%
United States3.2%
Argentina1.4%
Turkey1.2%
Distribution history - annual distributions (Institutional Class)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
Return of
capital
20180.0000.0000.000
20170.0000.3650.000
20160.0000.1370.000
20150.0000.0140.024
20140.3480.1060.000
20130.0000.1540.000
20120.0000.1420.000
20110.1390.1670.000
20100.0000.1200.000
20090.0000.0310.000
20080.8230.0510.000

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.

Institutional Class shares available only available to certain investors. See the prospectus for more information.

Liu-Er Chen

Liu-Er Chen, CFA

Senior Vice President, Chief Investment Officer — Emerging Markets and Healthcare

Start date on the Fund: September 2006

Years of industry experience: 22

(View bio)


Institutional Class shares available only available to certain investors. See the prospectus for more information.

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 pricenone
Maximum contingent deferred sales charge (load) as a percentage of original purchase price or redemption price, whichever is lowernone
Annual fund operating expenses
Management fees1.16%
Distribution and service (12b-1) feesnone
Other expenses0.25%
Total annual fund operating expenses1.41%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers1.41%

Institutional Class shares available only available to certain investors. See the prospectus for more information.

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 1.42% 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 Emerging Markets Fund Quarterly commentary March 31, 2018

Overview

The MSCI Emerging Markets Index (net), the Fund’s benchmark, rose 1.4% during the first quarter of 2018. Despite a volatile quarter for equity markets overall, fund flows into emerging markets remained robust, supported by stabilizing economic data, rising earnings expectations, and modest US dollar weakness. January’s strong market rise was followed by declines in February and March. Inflation fears initially drove February’s fall. As markets began to settle, volatility arose again in March amid rising trade tensions and protectionist measures from the Trump administration and a US interest rate hike. Among regions, Latin America was the strongest-performing while Asia and Europe, the Middle East, and Africa (EMEA) trailed. Among sectors, energy and healthcare delivered the strongest performance while consumer discretionary and telecommunications lagged.

Within the EMEA region, Russia was the main source of strength, supported by rising energy prices. South Africa pulled back after December’s rally following the African National Congress (ANC) election. Market weakness was fairly widespread across sectors. The country continues to transition to a post-Jacob Zuma era as he officially resigned the country’s presidency in February. Turkish equities also fell during the quarter due to currency weakness.

Pakistan and Thailand were the strongest-performing markets within Asia. Thailand was supported by rising energy prices and a strengthening economy. The Philippines was the weakest-performing market, weighed down by inflation concerns and currency weakness. Chinese stocks rose during January as China’s economy continued to stabilize. However, volatility then returned in sympathy with global markets and in response to increased US-China trade tensions. India lagged amid mixed corporate earnings and rising concerns regarding government budget deficits. Additionally, the Bharatiya Janata Party, India’s ruling party, did not fare as well in recent state elections, leading to increased political uncertainty.

Latin America was the strongest-performing region, led by Brazil and Peru. Brazil’s stocks rose as its economy continued to strengthen and inflation remained in check. Energy was the strongest-performing sector on the back of rising crude oil prices. Peruvian equities rallied after the country’s president resigned amid a corruption scandal, clearing the way for an improved political picture. Brazil’s central bank also cut interest rates as inflation continues to moderate. Mexico slightly lagged the MSCI Emerging Markets Index despite receiving tariff exemptions from the Trump administration. However, ongoing North American Free Trade Agreement (NAFTA) negotiations and political uncertainty ahead of Mexico’s July 1, 2018 presidential election weighed on equities.

Within the Fund

During the first quarter, Micron Technology Inc. was one of the largest contributors to the Fund’s relative performance. One of the largest manufacturers of dynamic random-access memory (DRAM), the company reported strong financial results underpinned by continued growth in memory demand. We believe Micron is well-positioned to benefit from industry consolidation and increasing demand for memory across various applications.

In South Africa, the Fund’s underweight stance contributed to relative performance as shares of Naspers Ltd., in which we are significantly underweight, fell in sympathy with Tencent Holdings Ltd. late in the quarter. Naspers owns a large stake in Tencent.

Brazil also contributed to relative performance due to the Fund’s overweight allocation. Shares of B2W Cia Digital appreciated due to investors’ favorable view of the company’s shift in sales strategy and evidence of margin expansion. We continue to believe that the company is well-positioned for structural growth in Brazil’s ecommerce industry, which is still in its early stages of development.

On the negative side, China was the main source of underperformance for the Fund. Sohu.com Inc. reported mixed financial results as the company faced near-term headwinds within its mobile game business and continued to invest in traffic acquisition in its search business. We believe that shares of Sohu.com remain undervalued and that the company is well-positioned over the long term to benefit from rising consumption and Internet engagement in China.

In South Korea, both the Fund’s overweight allocation and our stock selection were unfavorable. SK Telecom Co. Ltd underperformed on concerns about regulatory pressure on pricing. We continue to believe the stock is attractively valued considering the stable competitive environment, strong cash flow generation, its investment stake in SK Hynix Inc., and long-term growth opportunities in 5G wireless network technology.

Mexico detracted from the Fund’s relative performance, hurt by unfavorable stock selection. Shares of Grupo Televisa SAB declined on softness in advertising revenue. Additionally, the company disclosed weaknesses in its financial controls. While the firm publicly stated there was no evidence of incorrect financial figures, it led to further stock volatility. We believe that the company’s cable franchise remains attractive and that the stock is undervalued. In the consumer staples sector, shares of Coca-Cola Femsa SAB de CV declined after reporting mixed financial results due to price weakness in South America. We are optimistic about the company’s long-term growth prospects in Latin America and Southeast Asia.

Unfavorable stock selection in India hurt relative performance. Shares of Reliance Industries Ltd. declined along with the broader Indian equity market. In addition, in its telecommunications business, Reliance continues to pursue an aggressive subscriber-acquisition strategy, which may dampen the near-term outlook for profitability. Its core refining and petrochemicals businesses continue to perform well.

Shares of BRF S.A., the largest poultry producer in Brazil, declined after the company announced weaker-than-expected financial results as well as an investigation into food and safety practices. We continue to view the franchise as attractive as its brand and operations remain intact, and we expect the stock to outperform as the sector consolidates and the poultry cycle turns more favorable.

On a sector basis, technology was the largest contributor to the Fund’s performance, led by Micron Technology and SK Hynix. Consumer discretionary also added to performance, driven by B2W Cia Digital and the Fund’s relative underweight to Naspers. Telecommunications was the main detractor from performance on weakness in SK Telecom and China Mobile Ltd. In the consumer staples sector, Coca-Cola Femsa and BRF weighed on performance.

Outlook

Our positive long-term view on emerging markets remains intact. Despite ongoing political concerns in many parts of the world, we believe that monetary and fiscal policies, coupled with government-reform measures, will provide support for emerging economies. We continue to believe that the Chinese economy will muddle through, supported by structural growth in consumption, improvement in living standards, and targeted government policies.

Considering the varied macroeconomic backdrop across emerging markets, we believe there are selective opportunities for long-term stock appreciation driven by structural demographic shifts, technology adoption, implementation of government policy, improvement in corporate governance, and industry consolidation. Our investment approach remains centered on identifying individual companies that we believe possess sustainable franchises and favorable long-term growth prospects and that trade at significant discounts to their intrinsic value. We are particularly focused on companies that we expect to benefit from long-term changes in how people in emerging markets live and work. Among countries, we currently hold overweight positions in Brazil, Russia, South Korea, and Mexico. Conversely, we are currently underweight South Africa and Taiwan. Sectors we currently favor include technology, telecommunications, and consumer staples. We are underweight financials.

Past performance is not a guarantee 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.

[467038] 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 800 523-1918. 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

Daily pricing (as of 07/20/2018)

Institutional ClassPriceNet change
NAV$19.020.16
Max offer price$19.02n/a

Total net assets (as of 06/30/2018)

$5.2 billion all share classes

Overall Morningstar RatingTM

 
Institutional Class shares (as of 06/30/2018)
RatingNo. of funds
Overall4688
3 Yrs5688
5 Yrs4489
10 Yrs4203
Morningstar categoryMorningstar Diversified Emerging Markets Category

(View Morningstar disclosure)

The Morningstar rating is based on risk-adjusted returns.

Morningstar ranking (as of 06/30/2018)

YTD ranking616 / 861
1 year417 / 823
3 years10 / 688
5 years19 / 489
10 years25 / 203
Morningstar categoryMorningstar Diversified Emerging Markets Category

(View Morningstar disclosure)

The Morningstar ranking is based on historical total returns.

Lipper ranking (as of 06/30/2018)

YTD ranking618 / 870
1 year423 / 833
3 years15 / 701
5 years31 / 499
10 years31 / 210
Lipper classificationLipper Emerging Markets Funds Average

(View Lipper disclosure)

The Lipper ranking is based on historical total returns.

Benchmark, peer group

MSCI Emerging Markets Index (view definition)

Morningstar Diversified Emerging Markets Category (view definition)

Lipper Emerging Markets Funds Average (view definition)

Additional information