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*Quarterly
Capital gains paid*December

*If any.

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 (06/30/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)12.01%13.82%10.50%16.75%n/a1.58%01/10/2007
Max offer pricen/a7.26%8.36%15.36%n/a0.78%
FTSE EPRA/NAREIT Developed Index12.21%14.38%10.19%17.41%n/an/a
Average annual total return as of quarter-end (06/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)7.06%12.01%13.82%10.50%16.75%n/a1.58%01/10/2007
Max offer price0.94%5.50%7.26%8.36%15.36%n/a0.78%
FTSE EPRA/NAREIT Developed Index7.88%12.21%14.38%10.19%17.41%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.

Expense ratio
Gross1.66%
Net1.40%

Net expense ratio reflects a contractual waiver of certain fees and/or expense reimbursements from Feb. 27, 2014 through Feb. 27, 2015. Please see the fee table in the Fund's prospectus for more information.

Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
20144.62%7.06%n/an/an/a
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 06/30/2014
Share assets$8.4 million
Number of holdings83
Market cap (median)$4.80 billion
Market cap (weighted average)$13.03 billion
Portfolio turnover (last fiscal year)112%
Beta (relative to FTSE EPRA/NAREIT Developed Index) (view definition)0.94
Annualized standard deviation, 3 years (view definition)15.70
Portfolio composition as of 06/30/2014Total may not equal 100% due to rounding.
Domestic equities53.5%
International equities & depository receipts43.9%
Cash and cash equivalents2.5%
Top 10 holdings as of 06/30/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Simon Property Group Inc.5.3%
Sun Hung Kai Properties Ltd.3.2%
Mitsui Fudosan Co. Ltd.2.6%
UDR Inc.2.0%
AvalonBay Communities Inc.2.0%
Host Hotels & Resorts Inc.1.9%
Boston Properties Inc.1.8%
Great Portland Estates PLC1.7%
SL Green Realty Corp.1.7%
Dexus Property Group1.7%
Total % Portfolio in Top 10 holdings23.9%

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

Top 10 countries as of 06/30/2014List excludes cash and cash equivalents.
Country% of portfolio
United States53.5%
Japan8.1%
Australia7.8%
Hong Kong6.6%
United Kingdom5.1%
Canada3.7%
France3.1%
Germany2.6%
Singapore2.5%
Sweden1.8%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20140.0000.048
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
20040.0000.000

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 is only provided from June 1, 2014 onward.

3Includes both short- and long-term capital gains.

Bob Zenouzi

Bob Zenouzi 

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

Start date on the Fund: September 2012

(View bio)


Damon Andres

Damon Andres, CFA

Vice President, Senior Portfolio Manager

Start date on the Fund: September 2012

(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 under the section entitled "Purchasing Shares."

The following table 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 expenses0.42%
Total annual fund operating expenses1.66%
Fee waivers and expense reimbursements(0.26%)
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, taxes, interest, short sale and dividend interest expenses, brokerage fees, certain insurance costs, acquired fund fees and expenses, and nonroutine expenses or costs, including, but not limited to, those relating to reorganizations, litigation, conducting shareholder meetings, and liquidations) in order to prevent annual fund operating expenses from exceeding 1.15% of the Fund's average daily net assets from Feb. 27, 2014 through Feb. 27, 2015. 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 March 31, 2014 Class A (DGRPX)

Within the Fund

For the first quarter of 2014, Delaware Global Real Estate Opportunities Fund (Class A shares at net asset value) posted a positive return and outperformed its benchmark, the FTSE EPRA/NAREIT Developed Index.

The Fund’s outperformance was driven primarily by country allocations. Stock selection had a neutral effect on total return. The largest contribution by far to relative outperformance came from the Fund’s underweight allocation to Japan, as Japan was the weakest market in the first quarter, declining 12%. After a strong run-up following the introduction of Prime Minister Shinzō Abe’s mix of policy prescriptions (commonly dubbed “Abenomics”) last year, the Japanese real estate market became overpriced relative to net asset values. Our concern about these valuations led us to maintain the strong underweight. Investors have shown their concern about the long-term effectiveness of Abenomics, as well as the effect of new tax rules and demographic headwinds.

The Fund also maintained a large overweight allocation to the United States, averaging 55% of the portfolio during the quarter. This aided relative performance as the U.S. was one of the stronger markets, returning just more than 10%. The country continued to benefit from a supportive environment for real estate, driven specifically by limited new supply in most asset classes, cheap and available capital, fair valuations, and modest but steadily recovering demand. The best-performing sectors were apartments, self storage, and industrial — those that tend to be more linked to economic recovery.

The Fund’s underweight and beneficial stock selection in Hong Kong also benefited relative performance. Hong Kong was one of the weaker markets during the quarter, with a negative return, due in part to its exposure to mainland China, where slowing growth and defaults in consumer savings vehicles have been a big concern. Additionally, the Fund’s largest individual company overweight, Hysan Development, realized good cash-flow increases from its pure Hong Kong office and retail assets, which largely have been immune from mainland issues.

Despite the Fund’s overall outperformance, a few areas detracted from performance. Stock selection in the United Kingdom was one. While the absolute return for U.K. real estate was strong, at more than 7%, the Fund’s U.K. holdings realized only a 6% gain. This lagging performance was attributable to underownership in companies that benefit from single-family housing strength. Grainger and Big Yellow Group, for example, benefit from increased turnover and sales prices of single-family housing. These companies helped boost the country-level return, but the Fund failed to participate in their upside.

Canada was another area of weakness for the Fund owing to stock selection. While Canada produced a modest gain for the quarter, performance was hampered by the Fund’s investment in Canadian Real Estate Investment Trust, which we sold during the quarter. Unfortunately, when we sold this holding as part of lowering the Fund’s weight in Canada over concerns about economic weakness, we had already realized a loss for the quarter. We subsequently moved this allocation into what we considered to be better opportunities in Australia.

Outlook

Real estate markets across the globe are generally experiencing favorable conditions, though we have areas of concern. On the positive side, U.S. markets are performing well as the Federal Reserve has created an accommodative environment for users of capital, such as real estate companies. With the U.S. economy still slowly recovering, supply-and-demand is tilted in favor of real estate owners. Though we are not yet experiencing a raging recovery, we believe that the duration of positive fundamentals should be present for an extended period.

In Europe, we still have reservations about structural issues surrounding monetary and fiscal policies and social regimes that are not always favorable to economic (and real estate) growth. That said, European markets have stopped their decline and the European Central Bank has taken lessons from the U.S., leading us to believe that future change will be for the better, not worse. As we consider real estate investing across Europe, we are acutely focused on risk-reward balance as there could be great investment opportunities but several value traps as well. Ultimately, we believe Europe is close to a turning point, but it should be approached with some caution.

China is an area of concern. Despite an already significant selloff in the Chinese market, we believe risk is still to the downside. The overall environment in China is difficult for real estate companies to navigate. Continued slowing and below-forecast growth present a challenge. Other issues we are leery about include continued rampant development, defaults in corporate debt and trust saving products, peaking debt maturities still on the horizon, government intervention, and social hazards. The Fund is not completely lacking exposure to China; we still find some positives in companies that have predominant exposure to Hong Kong and strong balance sheets that have the potential to be helpful in uncertain environments.

Elsewhere, we continue to find potential opportunities in countries that do not seem to be on the verge of significant change, either positive or negative. The U.K. and Australia are linked to broader global issues such as financial industry health, Chinese growth, and European monetary changes, but we believe the opportunities in these countries are attractive from a bottom-up (stock-by-stock) perspective. In our view, Japan continues to be a volatile market with a great deal of uncertainty, but we are ready to take advantage of better valuations there as they occur.

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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.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 07/11/2014)

Class APriceNet changeYTD
NAV$7.05-0.0112.33%
Max offer price$7.48n/an/a

Total net assets (as of 06/30/2014)

$51.9 million all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 06/30/2014)

Load waivedWith loadNo. of funds
Overall43174
3 Yrs53174
5 Yrs43147
Morningstar categoryGlobal Real Estate

(View Morningstar disclosure)

Lipper ranking (as of 06/30/2014)

YTD ranking38 / 139
1 year59 / 134
3 years5 / 102
5 years30 / 88
10 yearsn/a
Lipper classificationGlobal Real Estate Funds

(View Lipper disclosure)

Benchmark

FTSE EPRA/NAREIT Developed Index (view)

Lipper Global Real Estate Funds Average (view)

Additional information