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 (03/31/2015)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-3.96%-10.78%1.27%1.26%7.84%7.51%06/10/1996
Max offer price-9.49%-15.90%-0.71%0.06%7.20%7.17%
MSCI Emerging Markets Index (Gross)2.28%0.79%0.67%2.08%8.82%n/a
MSCI Emerging Markets Index (Net)2.24%0.44%0.31%1.75%8.47%n/a
Average annual total return as of quarter-end (03/31/2015)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)-3.96%-3.96%-10.78%1.27%1.26%7.84%7.51%06/10/1996
Max offer price-9.49%-9.49%-15.90%-0.71%0.06%7.20%7.17%
MSCI Emerging Markets Index (Gross)2.28%2.28%0.79%0.67%2.08%8.82%n/a
MSCI Emerging Markets Index (Net)2.24%2.24%0.44%0.31%1.75%8.47%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.

Expense ratio
Gross1.69%
Net1.69%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
2015-3.96%n/an/an/an/a
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%
20051.82%3.97%16.43%2.52%26.37%
Portfolio characteristics - as of 03/31/2015
Number of holdings129
Market cap (median)$5.30 billion
Market cap (weighted average)$49.23 billion
Portfolio turnover (last fiscal year)26%
Beta (relative to MSCI Emerging Markets Index (Gross)) (view definition)1.13
Annualized standard deviation, 3 years (view definition)15.99
Portfolio composition as of 03/31/2015Total may not equal 100% due to rounding.
International equities & depositary receipts99.3%
Domestic equities1.1%
Cash and cash equivalents-0.5%
Top 10 holdings as of 03/31/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holdings based by issuer.
Holding% of portfolio
Samsung Electronics Co Ltd7.7%
Reliance Industries Ltd5.0%
China Mobile Ltd4.1%
SK Telecom Co Ltd3.5%
Baidu Inc3.4%
Sohu.com Inc3.3%
Grupo Televisa SAB2.8%
KCC Corp2.4%
Petroleo Brasileiro SA2.1%
SINA Corp/China2.1%
Total % Portfolio in Top 10 holdings36.4%

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

Top 10 countries as of 03/31/2015List excludes cash and cash equivalents.
Country% of portfolio
China24.2%
South Korea23.9%
Brazil12.4%
India7.7%
Russia7.0%
Mexico6.8%
Taiwan4.6%
Argentina3.5%
Turkey3.1%
South Africa1.4%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20150.0000.000
20140.3480.065
20130.0000.117
20120.0000.109
20110.1390.130
20100.0000.085
20090.0000.005
20080.8230.016
20075.4810.234
20065.2980.523
20050.9000.269

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: 19

(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 March 31, 2015

Within the Fund

For the first quarter of 2015, Delaware Emerging Markets Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the MSCI Emerging Markets Index.

Among countries, Israel contributed positively to performance due to an overweight position in Teva Pharmaceutical Industries. The company’s stock gained on speculation that it was negotiating a large accretive acquisition. In other smaller markets, the Fund’s underweight positions in Colombia, Greece, United Arab Emirates, and Malaysia contributed to relative performance as all of these markets underperformed.

On the negative side, China and Brazil detracted the most from performance. In China, the Fund’s large underweight position in Tencent Holdings detracted from relative performance as the market became more positive about prospects for mobile ad monetization. Also in the Internet sector, the Fund’s holdings in Baidu, SINA, and Youku Tudou contributed negatively to performance. Baidu reported weaker-than-expected earnings results in January, while SINA recently announced mixed fourth-quarter earnings results. Online video company Youku reported larger-than-expected losses as the company increased content investment. The Fund’s position in Uni-President China Holdings also detracted from performance. Sales and profits declined in the second half of 2014 as consumption trends in China have remained broadly weak.

In Brazil, the Fund’s overweight position was unfavorable in terms of asset allocation, while stock selection was also negative. Shares of Tim Participacoes declined after investors assigned a smaller possibility for consolidation in Brazil. Meanwhile, competitor Telefonica’s plan to raise capital dampened valuation in the sector. Shares of airline carrier Gol also underperformed due to weak earnings results and concerns about the impact of foreign exchange movements. Shares of Braskem declined due to (1) concerns about electricity rationing, (2) the expiration of a low-cost power supply agreement with Eletrobras, and (3) allegations of improper payments to Petrobras. Finally, shares of B2W Cia Digital detracted from performance due to continued weakness in the consumer sector.

Among sectors, the Fund’s underweight position in utilities contributed the most to relative performance. In contrast, the technology sector detracted the most from performance due to the Fund’s underweight in Tencent, and the Fund’s overweight positions in Baidu, SINA, and Youku. The telecommunications sector also detracted from performance, due to the performance of Tim Participacoes in Brazil. The energy sector declined primarily due to the Fund’s holdings in Petrobras in Brazil and Reliance Industries in India. Shares of Reliance Industries fell as investor sentiment toward the energy sector remained subdued amid low oil prices. In addition, an executive from Reliance Industries was one of several individuals detained for allegedly obtaining confidential government documents illegally. Petrobras underperformed during the quarter after the company announced it would be delaying its earnings results due to a continued corruption investigation by the U.S. Securities and Exchange Commission.

Outlook

We believe the outlook for emerging markets appears mixed and volatile. We see notable valuations and growth opportunities in selective segments of the market, including Brazil and China. Challenges from politics, oil prices, and monetary policy may require investors to be patient, but they do not derail our long-term fundamental conviction in the sustainability of these franchises. On the other hand, we have concerns about excessive exuberance and optimism in other areas of the market such as India and Southeast Asia, and we believe that a disciplined and selective approach to investing is warranted. Over the course of this year, we expect some stabilization in the key sources of recent market volatility (such as oil prices and monetary policy), and as a result we are hopeful for a market environment that is more conducive to our stock-by-stock, fundamentals-driven investment approach.

[14401]

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 04/24/2015)

Class APriceNet changeYTD
NAV$15.490.187.57%
Max offer price$16.44n/an/a

Total net assets (as of 03/31/2015)

$2.5 billion all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 03/31/2015)

Load waivedWith loadNo. of funds
Overall43528
3 Yrs32528
5 Yrs32341
10 Yrs43162
Morningstar categoryDiversified Emerging Mkts

(View Morningstar disclosure)

Lipper ranking (as of 03/31/2015)

YTD ranking827 / 859
1 year718 / 764
3 years190 / 529
5 years183 / 332
10 years74 / 152
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