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.

Fund information
Inception date06/10/1996
Dividends paid (if any)Annually
Capital gains paid (if any)November or December
Fund identifiers
NASDAQDEMAX
CUSIP245914841
Investment minimums
Initial investment$1,000
Subsequent Investments$100
Systematic withdrawal balance$5,000
Account features
CheckwritingNo
Payroll DeductionYes
IRAsYes

On Sept. 25, 2014, Class B shares of the Fund converted to Class A shares.

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 (01/31/2016)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-7.91%-20.30%-7.09%-5.17%2.61%6.14%06/10/1996
Max offer price-13.23%-24.86%-8.90%-6.29%2.01%5.82%
Average annual total return as of quarter-end (12/31/2015)
Current quarter1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)9.29%-13.93%-3.60%-3.76%4.38%6.61%06/10/1996
Max offer price3.03%-18.89%-5.47%-4.90%3.77%6.29%
MSCI Emerging Markets Index (Gross)0.73%-14.60%-6.42%-4.47%3.95%n/a
MSCI Emerging Markets Index (Net)n/a-14.92%-6.76%-4.81%3.61%n/a

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.

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
Gross1.69%
Net1.69%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
2015-3.96%4.77%-21.74%9.29%-13.93%
2014-1.48%7.84%-3.43%-10.80%-8.48%
20132.09%-5.19%13.48%3.55%13.74%
201212.01%-11.80%9.46%7.61%16.37%
20113.56%-4.04%-25.52%6.98%-20.82%
20102.58%-10.48%17.88%9.50%18.53%
2009-1.05%35.10%22.74%8.51%78.05%
2008-9.71%1.74%-26.90%-26.58%-50.70%
20073.12%17.45%11.07%4.53%40.61%
20069.40%-5.99%4.54%18.23%27.12%
Portfolio characteristics - as of 01/31/2016
Number of holdings95
Market cap (median)$3.31 billion
Market cap (weighted average)$31.41 billion
Portfolio turnover (last fiscal year)12%
Beta, 3 years (relative to MSCI Emerging Markets Index (Gross)) (view definition)1.19
Annualized standard deviation, 3 years (view definition)18.52
Portfolio composition as of 01/31/2016Total may not equal 100% due to rounding.
International equities & depositary receipts100.9%
Domestic equities1.2%
Cash and cash equivalents-2.1%
Top 10 holdings as of 01/31/2016
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holdings based by issuer.
Holding% of portfolio
Reliance Industries Ltd7.0%
Sohu.com Inc6.1%
SINA Corp/China5.7%
Samsung Electronics Co Ltd5.2%
Baidu Inc4.4%
SK Telecom Co Ltd3.6%
Youku Tudou Inc3.2%
Tencent Holdings Ltd2.9%
Taiwan Semiconductor Manufactu2.4%
Grupo Televisa SAB2.3%
Total % Portfolio in Top 10 holdings42.8%

Data sheet

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

Top 10 countries as of 01/31/2016List excludes cash and cash equivalents.
Country% of portfolio
China32.9%
South Korea13.3%
Brazil12.4%
Russia11.3%
India9.8%
Taiwan5.6%
Mexico5.1%
Turkey4.8%
Argentina3.3%
United States1.2%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
Return of
capital
20160.0000.0000.000
20150.0000.0010.003
20140.3480.0650.000
20130.0000.1170.000
20120.0000.1090.000
20110.1390.1300.000
20100.0000.0850.000
20090.0000.0050.000
20080.8230.0160.000
20075.4810.2340.000
20065.2980.5230.000

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.

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: 20

(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 fees1.17%
Distribution and service (12b-1) fees0.25%
Other expenses0.27%
Total annual fund operating expenses1.69%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.69%

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Delaware Emerging Markets Fund Quarterly commentary December 31, 2015

Within the Fund

Delaware Emerging Markets Fund (Institutional Class shares and Class A shares at net asset value) outperformed its benchmark, the MSCI Emerging Markets Index, during the fourth quarter.

Among countries, China contributed the most to performance due to our investments in the Internet sector. Many stocks that underperformed in the third quarter rebounded. Shares of Baidu rose as the company reported encouraging operating performance in its core business. In addition, Baidu was included in the MSCI Emerging Markets Index. Furthermore, the merger between Ctrip.com and Qunar will allow Baidu to deconsolidate Qunar’s losses from its income statement. Among other Internet stocks, shares of Sohu.com rallied after the company reported strong results in its search business. In addition, the company’s chairman proposed to increase his stake in the company. SINA outperformed due to robust operating performance in its Weibo business and speculation that the company may be a candidate for privatization or acquisition. Finally, shares of Youku Tudou jumped after Alibaba offered to acquire at a premium the remaining Youku Tudou shares it does not own.

Elsewhere, India, Russia, and Brazil contributed positively to performance. In India, shares of Reliance Industries outperformed due to a favorable outlook for refining margins. In addition, the launch of the company’s 4G telecom service is approaching. In Russia, shares of Yandex rose sharply after the company reported strong quarterly results and guidance. In Brazil, shares of Hypermarcas benefited from the company’s announced sale of certain beauty and personal care brands. Braskem outperformed as the company reported strong third-quarter results boosted by currency depreciation and robust chemical spreads.

On the negative side, Korea detracted the most from performance primarily due to the telecom sector. Several concerns adversely affected the shares of SK Telecom. First, the company purchased shares of cable operator CJ Hellovision at a premium valuation. Second, the value of SK Telecom’s investment in SK Hynix declined due to weak demand for memory chips. Third, the ownership structure of the broader SK group may be affected by the chairman’s divorce proceedings. We believe that the operating fundamentals of the company remain unchanged and that the stock’s valuations are notable. Besides SK Telecom, shares of LG Uplus declined due to concerns that the company’s growth momentum from 4G has peaked.

Other detractors from performance included Indonesia and Malaysia. Our underweight stance in both markets was unfavorable in terms of asset allocation. We find few stocks in these markets that meet our investment criteria. In China, shares of Uni-President China Holdings fell in sympathy with broad-based weakness in the consumer staples sector. We believe that the company’s brands and distribution remain strong and that the company can leverage these assets to introduce new products.

Among sectors, technology contributed the most to performance due largely to the Chinese Internet sector. Energy also outperformed due to Reliance Industries. In contrast, telecom detracted the most from performance as SK Telecom, LG Uplus, and Tim Participacoes underperformed. Shares of Tim Participacoes declined due to persistent economic weakness and stalled efforts to consolidate the industry.

Outlook

Many of the issues that plagued emerging market equities in 2015 are likely to continue into 2016, including slowing economic growth in China, weak commodity prices, and further interest rate hikes in the United States. With respect to China, we believe that the economy will muddle through, supported by structural growth in consumption, improvement in living standards, and selective policy support from the government. While the path may not be smooth, any evidence of stabilization in growth could serve as a positive catalyst. Regarding U.S. interest rates, we expect monetary policy to remain accommodative overall in light of lingering global growth concerns.

Amid this challenging macroeconomic backdrop, we believe that there are pockets of opportunities for 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. Sectors we currently favor include technology and telecom. In the short term, global growth concerns are eclipsing fundamental valuation merits. However, we remain patient with our investments and expect companies with sound fundamentals to outperform over the long term.

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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.

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 02/08/2016)

Class APriceNet changeYTD
NAV$10.85-0.20-12.43%
Max offer price$11.51n/an/a

Total net assets (as of 01/31/2016)

$1.3 billion all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 01/31/2016)
Load waivedWith loadNo. of funds
Overall33581
3 Yrs32581
5 Yrs22392
10 Yrs43175
Morningstar categoryDiversified Emerging Mkts

(View Morningstar disclosure)

Lipper ranking (as of 01/31/2016)

YTD ranking828 / 897
1 year504 / 803
3 years197 / 563
5 years181 / 382
10 years44 / 160
Lipper classificationEmerging Markets Funds

(View Lipper disclosure)

Benchmark, peer group

MSCI Emerging Markets Index (view definition)

Lipper Emerging Markets Funds Average (view definition)

Additional information