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)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

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 (07/31/2014)
YTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)6.98%20.42%4.99%9.92%12.93%8.97%06/10/1996
Max offer price0.82%13.52%2.93%8.62%12.26%8.62%
MSCI Emerging Markets Index (Gross)8.46%15.72%0.74%7.68%12.72%n/a
MSCI Emerging Markets Index (Net)8.19%15.32%0.40%7.34%12.36%n/a
Average annual total return as of quarter-end (06/30/2014)
QTDYTD1 year3 year5 year10 yearLifetimeInception date
NAV (view definition)7.84%6.24%24.85%3.86%11.94%13.13%8.97%06/10/1996
Max offer price1.66%0.12%17.64%1.84%10.63%12.47%8.62%
MSCI Emerging Markets Index (Gross)6.71%6.32%14.68%-0.06%9.58%12.30%n/a
MSCI Emerging Markets Index (Net)6.59%6.14%14.31%-0.39%9.24%11.94%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
Gross1.71%
Net1.71%
Quarterly total returns @ NAV
Year1st quarter2nd quarter3rd quarter4th quarterAnnual return
2014-1.48%7.84%n/an/an/a
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%
20047.34%-6.11%11.05%18.19%32.28%
Portfolio characteristics - as of 07/31/2014
Share assets$516.8 million
Number of holdings128
Market cap (median)$6.21 billion
Market cap (weighted average)$40.77 billion
Portfolio turnover (last fiscal year)24%
Beta (relative to MSCI Emerging Markets Index (Gross)) (view definition)1.03
Annualized standard deviation, 3 years (view definition)20.75
Portfolio composition as of 07/31/2014Total may not equal 100% due to rounding.
International equities & depository receipts99.8%
Domestic equities1.6%
Cash and cash equivalents-1.4%
Top 10 holdings as of 07/31/2014
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holdings based by issuer.
Holding% of portfolio
Baidu Inc5.3%
Samsung Electronics Co Ltd5.2%
Reliance Industries Ltd4.8%
SK Telecom Co Ltd3.4%
Petroleo Brasileiro SA3.1%
Teva Pharmaceutical Industries2.5%
Sohu.com Inc2.5%
B2W Cia Digital2.4%
SINA Corp/China2.4%
China Mobile Ltd2.4%
Total % Portfolio in Top 10 holdings34.0%

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

Top 10 countries as of 07/31/2014List excludes cash and cash equivalents.
Country% of portfolio
China20.5%
South Korea20.0%
Brazil17.5%
Russia8.4%
Mexico6.8%
India6.7%
Taiwan4.2%
Argentina3.6%
Israel2.5%
Turkey1.9%
Distribution history - annual distributions (Class A)1,2
Distributions ($ per share)
YearCapital gains3Net investment
income
20140.0000.000
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
20040.3840.092

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.

Liu-Er Chen

Liu-Er Chen, CFA

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

Start date on the Fund: September 2006

(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 fees1.18%
Distribution and service (12b-1) fees0.25%
Other expenses0.28%
Total annual fund operating expenses1.71%
Fee waivers and expense reimbursementsnone
Total annual fund operating expenses after fee waivers and expense reimbursements1.71%

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Delaware Emerging Markets Fund Quarterly commentary June 30, 2014 Class A (DEMAX)

Within the Fund

For the second quarter of 2014, Delaware Emerging Markets Fund (Class A shares at net asset value) posted a positive return and outperformed its benchmark, the MSCI Emerging Markets Index.

Among countries, Brazil and South Korea contributed the most to performance. In Brazil, the Fund’s overweight position benefited from rising hopes for a change in government, while stock selection was also positive. Shares of mobile telecommunications operator Tim Participacoes rose on the back of continued speculation about industry consolidation. In the consumer sector, Hypermarcas and BRF performed well as both companies showed improvement in operating performance during the first quarter, while B2W Cia Digital benefited from positive sentiment toward the e-commerce sector.

In Korea, the Fund’s overweight positions in KCC, SK Telecom, and Lotte Chilsung Beverage contributed to performance. Shares of KCC rose as the company’s paint and building materials businesses are benefiting from a domestic housing recovery. In addition, KCC owns a stake in Samsung Everland, which announced its intention to become a listed company. In the mobile telecommunications sector, shares of SK Telecom recovered from underperformance in the first quarter as subscribers continue to upgrade to 4G LTE services, which generate higher revenue. In the consumer sector, Lotte Chilsung benefited from currency appreciation.

On the negative side, Israel and China detracted the most from performance. In Israel, Teva Pharmaceutical Industries underperformed. The U.S. Supreme Court in April rejected a request to block generic versions of Copaxone while the court hears an appeal over Teva’s patent, leaving the company exposed to competition from generics. In China, shares of internet companies Sohu.com and SINA declined. The Chinese government has become increasingly vigilant about content distributed on the internet, and both Sohu.com and Sina have had some of their online video content banned in recent months. The government has revoked some of Sina’s internet licenses as well. The effect of these actions on potential advertising revenue has caused these stocks to underperform, although we believe that the share prices already reflect these concerns. Underperformance from Sohu.com and Sina was partially mitigated by our position in Baidu, which performed well as the company gains traction in mobile search.

In Chile, Sociedad Quimica Y Minera de Chile underperformed due to depressed iodine and potash pricing.

Among sectors, financials contributed the most to performance. Our underweight stance in this sector was favorable in terms of asset allocation, while our Argentine holdings Cresud and IRSA Inversiones y Representaciones both outperformed due to hopes for a resolution between the government and its creditors. In the consumer staples sector, Lotte Chilsung, Hypermarcas, and BRF supported performance. In contrast, the technology sector detracted the most from performance primarily due to share price declines in Sohu.com and SINA. In the materials sector, in addition to the underperformance of Sociedad Quimica Y Minera de Chile, shares of Fibria Celulose declined on concerns about capacity additions in the pulp industry. The healthcare sector detracted from relative performance due to our holding in Teva Pharmaceutical.

Portfolio transactions

In the second quarter of 2014: 

  • We initiated positions in Vallourec, Reliance Communications, QIWI, Qunar Cayman Islands, and Daum Communications. We believe that Vallourec, which manufactures steel tubes, is well-positioned for long-term growth in the oil and gas sector and that current valuations are attractive. We expect Reliance Communications, a mobile telecom provider in India, to benefit from balance sheet deleveraging and structural demand growth for mobile data services. For Qiwi, which provides payment services in Russia, and Qunar, which provides online travel services in China, we see strong competitive positioning combined with robust growth opportunities. For Daum Communications in Korea, we believe that the company’s acquisition of Kakao will unlock revenue potential in mobile search and advertising.

  • We added to several of our Russian positions including Sberbank, Rosneft, and Lukoil, as the market’s broad selloff provided favorable buying opportunities. We also added to Samsung Electronics, Reliance Industries, and SINA, among others, due to attractive valuations.

  • We trimmed our positions in Tim Participacoes, Teva Pharmaceutical, and Yahoo.

Outlook

On the back of easing geopolitical tensions, stabilizing economic growth, and accommodative monetary policy, liquidity conditions for emerging market equities appear likely to remain favorable in the near term. We continue to be mindful of potential risks, however, such as high debt levels and the slowing property market in China. In addition, geopolitics in the Middle East, Eastern Europe, and Asia remain unsettled. We continue to invest based on our bottom-up stock selection process, identifying companies with, in our view, long-term sustainable franchises that trade at significant discounts to our estimates of their intrinsic value. Among countries, the Fund’s largest overweight position is in Brazil. The Fund is also overweight in Israel, Mexico, South Korea, and Russia. Among sectors, the Fund is overweight in technology, telecommunications, and energy.

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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.

Diversification may not protect against market risk.

Not FDIC Insured | No Bank Guarantee | May Lose Value

Fund Finder

Daily pricing (as of 08/21/2014)

Class APriceNet changeYTD
NAV$17.78-0.069.89%
Max offer price$18.86n/an/a

Total net assets (as of 07/31/2014)

$3.2 billion all share classes

Overall Morningstar RatingTM

Load waived

With load

Class A shares (as of 07/31/2014)

Load waivedWith loadNo. of funds
Overall44457
3 Yrs44457
5 Yrs43328
10 Yrs44161
Morningstar categoryDiversified Emerging Mkts

(View Morningstar disclosure)

Lipper ranking (as of 07/31/2014)

YTD ranking319 / 734
1 year37 / 656
3 years39 / 461
5 years39 / 317
10 years24 / 152
Lipper classificationEmerging Markets Funds

(View Lipper disclosure)

Benchmark, peer group

MSCI Emerging Markets Index (view)

Lipper Emerging Markets Funds Average (view)

Additional information