Delaware Global Real Estate Opportunities Fund

Objective

Delaware Global Real Estate Opportunities Fund seeks maximum long-term total return through a combination of current income and capital appreciation.

Strategy

The Fund invests primarily in securities issued by U.S. and non-U.S. real estate and real estate-related companies.

Fund information
Inception date01/10/2007
Dividends paid (if any)Quarterly
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDGRPX
CUSIP245917653
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
CheckwritingNo
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 (07/31/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)0.16%3.49%9.56%11.18%n/a1.79%01/10/2007
Max offer price-5.64%-2.48%7.41%9.86%n/a1.08%
FTSE EPRA/NAREIT Developed Index0.59%3.55%9.44%11.08%n/an/a
Average annual total return as of quarter-end (06/30/2015)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-6.98%-3.63%-0.43%9.35%12.39%n/a1.34%01/10/2007
Max offer price-12.31%-9.21%-6.17%7.20%11.06%n/a0.63%
FTSE EPRA/NAREIT Developed Index-6.67%-2.78%0.41%9.49%12.37%n/an/a

Returns for less than one year are not annualized.

The Delaware Global Real Estate Opportunities Fund's performance information for periods prior to Sept. 28, 2012, reflects the performance of The Global Real Estate Securities Portfolio (the “Portfolio”) of Delaware Pooled® Trust, which merged into Delaware Global Real Estate Opportunities Fund (the “Fund”) as of that date. The performance information for Class A shares at offer has been adjusted to reflect the Fund’s current maximum sales charge. The Fund also has higher expenses than the Portfolio, including a Rule 12b-1 fee to which the Institutional Class of the Portfolio was not subject. Historical performance results at net asset value and offer prior to Sept. 28, 2012 have not been recalculated to reflect these expenses, but future results will be affected by them. The historical performance of the Portfolio would have been lower had it been subject to the Fund’s expense ratio.

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
Gross1.78%
Net1.40%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Feb. 27, 2015 through Feb. 29, 2016. Please see the fee table in the Fund's prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20153.60%-6.98%n/an/an/a
20144.62%7.06%-4.14%7.79%15.74%
20136.00%-3.11%1.27%0.34%4.36%
201211.69%2.71%4.57%7.43%28.87%
20112.96%3.96%-16.78%7.63%-4.13%
20103.43%-7.42%17.93%5.72%19.39%
2009-21.32%31.78%21.75%3.31%30.40%
2008-7.74%-8.11%-8.36%-31.08%-46.46%
2007n/a-4.66%4.18%-9.08%n/a
Portfolio characteristics - as of 07/31/2015
Number of holdings77
Market cap (median)$6.21 billion
Market cap (weighted average)$16.27 billion
Portfolio turnover (last fiscal year)107%
Beta (relative to FTSE EPRA/NAREIT Developed Index) (view definition)0.99
Annualized standard deviation, 3 years (view definition)11.54
Portfolio composition as of 07/31/2015Total may not equal 100% due to rounding.
Domestic equities59.9%
International equities & depositary receipts37.1%
Cash and cash equivalents3.0%
Top 10 holdings as of 07/31/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Simon Property Group Inc.5.5%
Mitsui Fudosan Co. Ltd.3.3%
General Growth Properties Inc.3.2%
Equity Residential2.9%
Public Storage2.6%
Klepierre2.4%
AvalonBay Communities Inc.2.4%
Unibail-Rodamco SE2.3%
SL Green Realty Corp.2.3%
Sun Hung Kai Properties Ltd.2.2%
Total % Portfolio in Top 10 holdings29.1%

Holdings are as of the date indicated and subject to change.

Top 10 countries as of 07/31/2015List excludes cash and cash equivalents.
Country% of portfolio
United States59.9%
United Kingdom7.9%
Japan7.0%
France5.9%
Hong Kong5.9%
Australia4.4%
Germany1.7%
Singapore1.0%
Finland0.9%
Spain0.8%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20150.0000.032
20140.0000.151
20130.0000.190
20120.0000.146
20110.0000.212
20100.0000.489
20090.0000.362
20080.0000.000
20070.0000.315
20060.0000.000
20050.0000.000

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.

A nimble approach

The Real Estate Securities and Income Solutions team (RESIS) at Delaware Investments sits together, in one office in Philadelphia. This unique setup helps differentiate the team from many of its peers and enhances its decision-making process. [Runtime: 2:18]

Watch the video

Read video transcript

Bob Zenouzi

Bob Zenouzi 

Senior Vice President, Chief Investment Officer — Real Estate Securities and Income Solutions (RESIS)

Start date on the Fund: September 2012

Years of industry experience: 29

(View bio)


Damon Andres

Damon J. Andres, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: September 2012

Years of industry experience: 24

(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 Investments® Funds. More information about these and other discounts is available from your financial advisor, 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 fees0.99%
Distribution and service (12b-1) fees0.25%
Other expenses0.54%
Total annual fund operating expenses1.78%
Fee waivers and expense reimbursements(0.38%)
Total annual fund operating expenses after fee waivers and expense reimbursements1.40%

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 and dividend 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 1.15% of the Fund's average daily net assets from Feb. 27, 2015 through Feb. 29, 2016. These waivers and reimbursements may only be terminated by agreement of the Manager and the Fund.

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Delaware Global Real Estate Opportunities Fund Quarterly commentary June 30, 2015

Within the Fund

For the second quarter of 2015, Delaware Global Real Estate Opportunities Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the FTSE EPRA/NAREIT Developed Index.

Currency impacts and country allocations hurt performance during the quarter. The Fund benefited from solid stock selection, though not enough to offset the aforementioned negative drivers.

The Fund’s overweight in the United States hindered performance, but we believe the rise in rates has been reflected in current U.S. real estate investment trust (REIT) pricing. The private markets are healthy with rising rents and limited supply. In our view, large pools of capital looking to invest in U.S. real estate can make that allocation cheaper on Wall Street than on Main Street (that is, REITs are cheaper than private real estate). We think private equity could be a buyer if these discounts persist, as multiple firms have raised large pools of capital.

Japanese exposure also detracted from performance. Japan remains our largest underweighted country in the Fund’s portfolio. For the quarter, Japan outperformed the benchmark return by approximately one-and-a-half percentage points, which caused a drag on Fund performance. Stock selection in Japan was suboptimal as we favor REITs, and therefore the Fund was less exposed to developers, which realized better returns during the quarter.

The Fund was also hurt by its exposure to Finland. While the benchmark has a minimal weighting in Finland, the Fund’s investment in Citycon (which declined 17.5%) created a drag from both a stock selection and an allocation perspective. Citycon, and Finland as a whole, performed poorly during the quarter, as the company conducted a rights offering to pay for a large portfolio acquisition; this created an overhang and pressured stock prices in Finland downward.

On the positive side, the Fund built on last quarter’s strength in the United Kingdom. Again, both allocation and stock selection were favorable and helped boost returns relative to the benchmark. The Fund’s investments in the U.K. were up 4.9% while the country as a whole was up 3.9%. The U.K. continued to benefit from the strength of the London market. Shaftesbury was the strongest position in the second quarter, returning 11.6%. Shaftesbury recognized industry-leading growth and demand from its in-place portfolio and several development schemes across London.

Stock selection in Hong Kong was another positive area for the Fund, as it more than offset the negative effect of our slight underweight to the country, which was the strongest region for the second quarter with a 4.0% return. In Hong Kong, we slightly increased exposure to companies with operations in mainland China because of the near-term effects of government efforts to boost growth. Long-term, however, we are concerned with mainland China, because of economic weakness and uncertainty, coupled with excess supply. As a result of our positioning in the quarter, the Fund’s strongest-performing holding was Kerry Properties (gaining 14.9%), which has 50% exposure to mainland China.

Outlook

Global real estate equities have done a round trip this year: up 4.2% in the first quarter and down 6.7% in the second quarter, creating a year-to-date return of -2.8%. At midyear, global real estate lagged broad global equities, as measured by the MSCI EAFE Index, which returned 5.9% year to date. We have continued to expect volatility this year as interest rates and central banks are transitioning. We view much of this volatility as creating investment opportunity, but we realize that the timing and magnitude of market reactions are unpredictable in the short term. (Data: FTSE, Bloomberg.)

While we have made some adjustments in the portfolio, such as adding to the Fund’s European allocation, we continue to favor the U.S. For the foreseeable future, we believe that a variety of unpredictable macro and technical factors may cause markets and individual stocks to react with short-term dislocations. This may keep volatility relatively high. In our view, the biggest issue is how and when central banks decide to raise rates. Ultimately, however, we believe that fundamentals and cost of capital should rule real estate values across the globe. As we have said before, it could take time for the market to adjust to a directional change in rates. As this process creates dislocations between real value and implied values in the stock market, we continue to look for opportunities in this environment.

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.

[14994]

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.

Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.

REIT investments are subject to many of the risks associated with direct real estate ownership, including changes in economic conditions, credit risk, and interest rate fluctuations.

A REIT fund's tax status as a regulated investment company could be jeopardized if it holds real estate directly, as a result of defaults, or receives rental income from real estate holdings.

“Nondiversified” funds may allocate more of their net assets to investments in single securities than “diversified” funds. Resulting adverse effects may subject these funds to greater risks and volatility.

International investments entail risks not ordinarily associated with U.S. 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.

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 08/28/2015)

Class APriceNet changeYTD
NAV$6.85-0.03-3.91%
Max offer price$7.27n/an/a

Total net assets (as of 07/31/2015)

$41.5 million all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 07/31/2015)
Load waivedWith loadNo. of funds
Overall53188
3 Yrs42188
5 Yrs53154
Morningstar categoryGlobal Real Estate

(View Morningstar disclosure)

Lipper ranking (as of 07/31/2015)

YTD ranking128 / 165
1 year68 / 140
3 years37 / 110
5 years11 / 95
10 yearsn/a
Lipper classificationGlobal Real Estate Funds

(View Lipper disclosure)

Benchmark

FTSE EPRA/NAREIT Developed Index (view definition)

Lipper Global Real Estate Funds Average (view definition)

Additional information