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Delaware Focus Global Growth Fund Quarterly commentary September 30, 2015

Within the Fund

For the third quarter of 2015, Delaware Focus Global Growth Fund (Institutional Class shares and Class A shares at net asset value) underperformed its benchmark, the MSCI World Index (net). Strong relative performance in the financials and energy sectors was unable to overcome weak relative performance in the consumer discretionary and industrials sectors.

Start Today, a Japan-based company which operates e-commerce shopping and fashion related websites, contributed to the Fund’s performance during the quarter. The company reported relatively strong financial results driven, in part, by a sales increase in its consignment business segment, which we believe will be a significant driver of future growth. The company continues its progress towards adapting its e-commerce platform over wireless devices (smartphones and tablets). Increased capital expenditures into this segment could decrease margins in the short-term; however, we believe they could also lead to increased growth potential over the long term, given strong secular demand for wireless and streaming technologies within the region.

Experian also contributed to performance during the quarter. While the company reported financial results that were somewhat mixed relative to consensus estimates, Experian showed growth in its core credit-services product offering. Additionally, the company made progress in transitioning “” customers to the “” brand. We believe Experian should continue to experience growth as the company adds credit and financial product offerings (either organically or through acquisition) and expands globally.

Amadeus IT Holdingwas a contributor to performance during the quarter. The stock seemed to rebound slightly from the previous quarter’s weakness after the company reported financial results that were relatively in-line. During the prior quarter, Lufthansa announced that it would be adding a surcharge to tickets booked via global distribution system providers. This has the potential to affect Amadeus if consumers and travel agents migrate towards direct bookings to bypass this surcharge. There are several reasons why we believe such a result is unlikely to occur; however, we are closely following the situation to determine whether other major airlines will attempt a similar approach. If we conclude that other major airlines are in the process of making a similar announcement, it could lead to a thesis change for us. Currently this is not the case and we don’t anticipate a material financial effect for the next 12 months.

Equinix also contributed to performance during the quarter. The company reported relatively strong financial results and increased its 2015 outlook. Additionally, the company is pursuing several strategic acquisitions that should further strengthen its global presence. The company continues to benefit from significant opportunities associated with cloud computing and its disruption in the information technology (IT) supply chain. Increased globalization, combined with the need for a secure and accessible network to meet the needs of a dispersed user base, seems to be creating significant demand for a company like Equinix. We believe its innovative product offerings allow the company to be well positioned in a technology spending environment that is focused on addressing the needs of enterprises that are struggling to maintain the highest level of network performance and quality of service for global users.

Grupo Televisa detracted from the Fund’s performance during the quarter. The company reported weaker-than-expected financial results driven, in part, by a decline in advertising revenue. Additionally, there is concern about increased competition within Mexico’s pay television market and the possibility that Grupo Televiso may experience increased regulation from Mexico’s telecommunications regulator, given its market dominance. We are not overly concerned about increased competition since the company has strengthened its competitive advantage through several key partnerships and acquisitions recently, and over the past several years. We believe that, similar to the historical industry dynamics that have played out in the U.S. cable industry, the proliferation of cable services within a growing middle class outside the U.S. is in strong secular growth: Grupo Televisa should continue to be a key participant in this trend.

Zebra Technologies detracted from performance during the quarter. After strong price appreciation during the past several quarters, the stock fell sharply after the company reported weaker-than-expected financial results and forward guidance. This was due, in part, by costs associated with the acquisition of the Motorola Solutions enterprise business and the company’s pursuit of large contracts for mobile computing devices that often carry lower profit margins. We are supportive of the company’s current strategy to target the mobile computing device market as it may help strengthen its ability to cross sell other higher margin products. Additionally, the acquisition of the Motorola Solutions enterprise business was the catalyst for our initial purchase of the company, as the combined cost and product synergies seemed compelling to us. We continue to believe the acquired technology from this business should allow the company to offer enhanced next-generation products.

Baidu also detracted from performance during the quarter. The company reported weaker-than-expected financial results driven, in part, by increased capital expenditure costs and disappointing guidance. In addition, concerns about China’s slowing economy, its falling stock market, and yuan currency devaluation efforts negatively affected the stock (note that Baidu reports financials in U.S. dollars but earns revenue primarily in yuan). While the company’s heavy capital investments into its mobile-related services are already providing growth for the company, its transition has affected near-term margins and revenue. We agree with the heavy investment spending strategy and continue to believe Baidu stands to benefit significantly from the proliferation of wireless and streaming technologies in China, making the company’s services even more accessible. We feel the company has upside potential given the sheer size of the Chinese market population, along with ancillary businesses that are becoming significant drivers of growth including social media, multimedia sharing services, and mobile search.


Despite positive absolute returns in the equity market during recent years, we believe the ever-changing market sentiment demonstrates that there are more than just fundamental factors affecting stock prices. A lack of confidence in the fundamental outlook suggests to us that many investors appear to be struggling with accurately predicting the pace of global economic recovery and are assessing external factors that threaten economic fundamentals (for example, central bank actions and fiscal policy debates across the globe). While some fundamentals in various geographies may be trending in a positive direction (from a very low base during the global financial crisis in 2008-2009), we don’t believe we are entering into a typical post-recessionary global boom cycle. Rather, we believe the lingering effects of the credit crisis could lead to moderate growth, at best, for the intermediate term. In such a tenuous environment, we believe the quality of a company’s business model, competitive position, and management may prove to be of utmost importance.

Regardless of the economic outcome, we remain consistent in our long-term investment philosophy: We want to own what we view as strong secular-growth companies with solid business models and competitive positions that we believe can grow market share and have the potential to deliver shareholder value in a variety of market environments.


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.


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.

Performance data current to the most recent month end may be obtained by calling 800 523-1918 or visiting

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 quarter-end (09/30/2015)
YTD1 year3 year5 year10 yearLifetimeInception
Class A (NAV)-10.29%-8.43%-5.44%5.64%7.44%n/a14.41%12/29/2008
Class A (at offer)-15.47%n/a-10.88%3.58%6.17%n/a13.41%
Institutional Class shares-10.26%-8.27%-5.21%5.92%7.69%n/a14.61%12/29/2008
MSCI World Index (Gross)-8.33%-5.63%-4.57%9.18%8.89%n/an/a
MSCI World Index (Net)-8.45%-6.04%-5.09%8.58%8.29%n/an/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.

Prior to Dec. 29, 2010, the Fund had not engaged in a broad distribution of its shares and had been subject to limited redemption requests. The returns reflect expense limitations that were in effect during certain periods and that may have been lower than the Fund's current expenses. The returns would have been lower without the expense limitations.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

MSCI World Index (view definition)

Expense ratio
Class A (Gross)1.40%
Class A (Net)1.40%
Institutional Class shares (Gross)1.15%
Institutional Class shares (Net)1.15%
Top 10 holdings as of 10/31/2015
Holdings are as of the date indicated and subject to change.
List excludes cash and cash equivalents.
Holding% of portfolio
Celgene Corp.4.5%
Baidu Inc.3.9%
Novo Nordisk A/S3.7%
Visa Inc.3.7%
Start Today Co. Ltd.3.5%
MasterCard Inc.3.5%
TripAdvisor Inc.3.3%
Allergan plc3.3%
Experian PLC3.3%
Total % Portfolio in Top 10 holdings37.2%

Institutional Class shares are only available to certain investors. See the prospectus for more information. 

All third-party marks cited are the property of their respective owners.

Jackson Square Partners, LLC (JSP), a U.S. registered investment advisor, is the sub-advisor to the Fund. As sub-advisor, JSP is responsible for day-to-day management of the Fund’s assets. Although JSP serves as sub-advisor, the investment manager, Delaware Management Company (DMC), a series of Delaware Management Business Trust, has ultimate responsibility for all investment advisory services.

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.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

All third-party marks cited are the property of their respective owners.

Not FDIC Insured | No Bank Guarantee | May Lose Value